*Note: On December 3, 2024, the US District Court for the Eastern District of Texas granted a nationwide preliminary injunction prohibiting the federal government from enforcing the CTA, its implementing regulations and its reporting deadlines. See Texas Top Cop Shop, Inc., et al. v. Garland, et al., Case No. 4:24-cv-478 (E.D. Tex.). See National Law Review.

The Corporate Transparency Act, passed in 2021, was designed to combat illicit activity including tax fraud, money laundering, and financing for terrorism by capturing more ownership information for specific U.S. businesses operating in or accessing the country’s market. The Financial Crimes Enforcement Network (“FinCEN”), part of the Treasury Department, began accepting reports on January 1, 2024. Businesses required to file reports have until January 1, 2025 to submit a Beneficial Ownership Information Report with FinCEN.

Companies required to report are called reporting companies. There are two types of reporting companies:

• Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
• Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.

There are 23 types of entities that are exempt from the reporting requirements. There is no de minimus exemption for small entities. The breadth of the statute and regulations make it clear that virtually every business created through a filing with a secretary of state must file. This means that most businesses, other than sole proprietorship or true general partnerships, are required to file. Whether this reporting requirement is a silly rule is debatable, especially since the State Secretaries of State and the IRS should already have this information (see Paperwork Reduction Act).

There is no fee for filing the report and FinCEN expects many, if not most, reporting companies will be able to submit their beneficial ownership information to FinCEN on their own using the guidance FinCEN has issued. You can e-file your report at this link. Instructions on how to file are at the following links:

• Beneficial Ownership Information Report (BOIR) Filing Instructions
• PDF BOIR Filing Method: Quick Reference Guide
• PDF BOIR Filing Method: Step-by-Step Instructions
• Online BOIR Filing Method: Quick Reference Guide
• Online BOIR Filing Method: Step-by-Step Instructions

Those who willfully violate the reporting requirement are subject to a fine of up to $500 per day (adjusted annually) for each day the violation continues and may be subject to criminal penalties of up to two years in prison and a $10,000 fine.