Corporate Transparency Act final regulations: More compliance for businesses
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Corporate Transparency Act final regulations: More compliance for businesses

The regulations of the Corporate Transparency Act (CTA) require certain entities to file reports with the Financial Crimes Enforcement Network (FinCEN) that identify two categories of individuals: the beneficial owners of the entity, and individuals who have filed an application with specified governmental authorities to create the entity, or register it to do business. This FinCEN decree comes into force on 1 January 2024.

Who is required to file?

Corporations, limited liability companies, and other entities that are

  1. created by filing a document with a secretary of state or any similar body, or
  2. formed under the laws of a foreign country and registered to do business in the United States

are designated as reporting companies and are required to file with FinCEN.

Who is exempt?

The regulations list 23 entities that are exempt from the CTA. These entities are heavily regulated and subject to substantial federal and state oversight.

Required reporting

Reporting companies are required to provide FinCEN with the following information for each beneficial owner and applicant of the reporting company:

  • full legal name
  • date of birth
  • current residential or business street address
  • a unique identifying number from an acceptable identification document
We support you in meeting the reporting obligations for your company on time.
Joseph Mecagni, CPA, MST, Marcum LLP*, Boston, Massachusetts, USA

Who is a beneficial owner?

A beneficial owner includes any individual who

  1. exercises substantial control over a reporting company, or
  2. owns or controls at least 25 percent of the ownership interests of a reporting company

The rule defines the terms “substantial control” and “ownership interest” and sets forth a range of activities that could constitute substantial control of a reporting company.

Reporting deadlines

The reporting deadlines for the law that will come into effect on 1 January 2024 are:

  • Reporting companies created or registered before 1 January 2024, will have one year (until 1 January 2025) to file their initial reports
  • Reporting companies created or registered after 1 January 2024, will have 30 days after receiving notice of their creation or registration to file their initial reports

Reporting companies have 30 days to report changes to the information in their previously filed reports and must correct inaccurate information in previously filed reports within 30 days of when the reporting company becomes aware or has reason to know of the inaccuracy of information in earlier reports.

Conclusion

The intent of the CTA is to unmask the owners of certain types of entities and create a massive non-public database for law enforcement, financial institutions, and other authorised users, say the Marcum experts. FinCEN will be developing compliance and guidance documents required to administer these requirements, as well as the infrastructure required to administer the new requirements.

For further information please contact:

Joseph Mecagni, CPA, MST, Marcum LLP*, Boston, Massachusetts, USA.
Email: joseph.mecagni@marcumllp.com 

*Marcum LLP is the exclusive associated partner of ECOVIS International for accounting, tax and audit in the United States of America.

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