Navigating the Corporate Transparency Act: Key Considerations & Compliance Guidelines

Important Notice of the Corporate Transparency Act Effective January 1, 2024

As we approach the year-end of 2023, FSKS wants to highlight the Corporate Transparency Act (“CTA”), a federal law that becomes effective on January 1, 2024. Under the CTA, companies formed through state or tribal filings must submit an online report to the United States Treasury’s Financial Crimes Enforcement Network (FinCEN). This report identifies “company applicants,” “beneficial owners,” and “persons who exercise substantial control of the company” as defined by the CTA. Such identifying information must include supporting documentation, including but not limited to a copy of a driver’s license or passport for each individual being identified.

The CTA and the more than 300 pages of regulations concerning the CTA impose extensive, onerous, complicated, and, in some aspects, unclear obligations on the companies within its purview. In a scenario where a trust owns a company under the CTA (“reporting company”), the report to FinCEN must include the Grantor, Trustee(s), and/or Beneficiaries as “beneficial owners” and “persons who exercise substantial control of the company.”

IT IS IMPORTANT TO BE AWARE THAT a company formed prior to December 31, 2023, will have until January 1, 2025, to fully comply with the CTA, but a company formed on or after January 1, 2024, will have only 30 days to comply.

While there are twenty-three (23) categories of exemptions from the applicability of the CTA, there are no exceptions, extensions, safe harbors, or grace periods for any of the FinCEN filing/reporting deadlines or for the required update filings/reports to FinCEN that are required in the event of any change in the company or its beneficial owners. Additionally, the non-compliance penalties under the CTA are severe, including civil penalties of up to $500 per day and criminal penalties of up to two (2) years imprisonment and a fine of up to $10,000.

For Your Review and Information:

• The September 2023 FinCEN Guide for Small Businesses concerning compliance with the CTA can be found here.
• You can also find updated compliance reporting information and guidance from FinCEN here.

FSKS Is On Your Side

Have questions about the Corporate Transparency Act? Contact Jim Shepard, Esq. at jshepard@fskslaw.com for expert guidance and to ensure your compliance with the CTA.

DISCLAIMER: THIS COMMUNICATION IS FOR GENERAL INFORMATION PURPOSES ONLY. WITHOUT A SPECIFIC WRITTEN ENGAGEMENT AGREEMENT, FSKS HAS NO OBLIGATION OR RESPONSIBILITY FOR: (A) REVIEW OF THE APPLICABILITY OF THE CORPORATE TRANSPARENCY ACT TO ANY COMPANY; (B) COMPLIANCE BY ANY COMPANY WITH THE CORPORATE TRANSPARENCY ACT; AND/OR (C) ANY INITIAL OR UPDATED FILINGS/REPORTING TO FINCEN.