TIME IS RUNNING OUT: CRITICAL CTA REGISTRATION DEADLINE APPROACHING
Under the Corporate Transparency Act (“CTA”), non-exempt corporations, limited liability companies (LLCs), and other similar entities created or registered to do business under the laws of the State must disclose and report information regarding the company’s beneficial owners to the Financial Crimes Enforcement Network (“FinCEN”). This law’s primary purpose is the prevention of money laundering, the funding of terrorist groups by unknown shell companies, and other illicit and criminal activity.
The January 1, 2025 deadline for most business entities is quickly approaching! Here's what you need you to know:
WHAT IS A BENEFICIAL OWNER?
A beneficial owner is an individual who, directly or indirectly:
• exercises substantial control over the entity, OR
• owns or controls not less than 25 percent of the ownership interests of the entity.
• If a beneficial owner is another entity, that entity would also file a report with FinCEN.
A beneficial owner is not:
• a minor child, if the child’s parent or guardian information is reported,
• an individual acting on behalf of another individual, or
• an individual whose only interest in the company is through a right of inheritance.
WHAT INFORMATION IS REQUIRED IN THE REPORT?
If a company has a beneficial owner to report, the following information must be reported to FinCEN:
• The beneficial owner’s full legal name,
• The beneficial owner’s date of birth,
• The beneficial owner’s current residential or business address, and
• The beneficial owner’s unique identifying number such as a passport, driver’s license, FinCEN number, or social security number.
Information reported to FinCEN is not publicly available and only available to select government entities which primarily deal with financial crimes.
WHEN SHOULD I FILE A REPORT?
The effective date for the rule is January 1, 2024.
• Companies created prior to January 1, 2024 shall be required to file with FinCEN within one year of the rule’s effective date, prior to January 1, 2025.
• Companies created after January 1, 2024 must file within thirty (30) days after the notice of its creation by the state department.
If a beneficial owner’s information changes at any point after filing the initial report, the company shall have thirty (30) days to file an updated report noting the change of information.
HOW DO I FILE A REPORT?
Reports will be filed electronically through a secure filing system available via https://www.fincen.gov/boi. This system is currently being developed but will be available before your report must be filed. There will be no cost to file.
DOES THE CTA APPLY TO ME?
The CTA generally applies to Pennsylvania corporations and LLCs; however, some companies are exempt from the CTA’s reach. For example, the CTA does not apply to businesses registered under the Securities Exchange Act of 1934, insurance companies, and 501(c) tax-exempt entities.
The business attorneys at Salzmann Hughes, P.C. are available to assist you with your reporting requirements under the CTA. Contact us today to get started.
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