Legal Alert: Existing Business Entities – What is Reported Under the Corporate Transparency Act?

The Corporate Transparency Act (“CTA”) is a federal law, effective January 1, 2024, to combat money laundering and use of anonymous shell corporations. The United States Department of Treasury has created a database to be used by law enforcement and regulators to trace small and medium sized businesses. Covered businesses will need to file a report electronically with this federal database.

For businesses created prior to January 1, 2024, the new reports will require information about the business and its beneficial owners.

Businesses required to report will disclose the business legal name, any assumed business names, address, jurisdiction of formation and tax identification numbers. 

In addition, businesses must disclose information about their beneficial owners. A beneficial owner is any individual who, directly or indirectly, exercises “substantial control” or owns or controls at least 25% of the company’s ownership interests. It may include owners, partners, directors, officers, and managers. Each beneficial owner must submit their legal name, date of birth, address and a copy of an accepted identification document, typically a current driver’s license or passport. 

Additional guidance on implementation, including the required forms and filing information, is expected in the coming weeks. We intend to follow this post up with additional compliance information as it becomes available. In the meantime, if you have any questions about the CTA, please feel free to reach out to us.