Corporate Transparency Act

There has a significant change in federal law that will impact nearly every client who is operating a business through a legal entity such as a corporation, limited liability company, limited partnership or other similar entity.

The Corporate Transparency Act (the “CTA”) became effective on January 1, 2024, and all required companies must comply with the new reporting requirements. The CTA requires specific private companies that meet the CTA criteria of a “reporting company” (a “Reporting Company”) to file informational reports with the Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) disclosing its beneficial ownership information as it relates to the company and its owners and principals. A Reporting Company will report its beneficial ownership information through a new federal government online portal called the “Beneficial Ownership Secure System.” 

Beneficial owners are those who own 25% or more of the company or exert control (like a manager, officer or director), must file a beneficial ownership form. It is very likely that any and all entities that have filed with the Secretary of State in Washington or any other state will be required to file with the CTA. There are exemptions to this reporting requirement, notably nonprofits or other tax-exempt entities do not need to report. However, almost all other private companies, even real estate holding companies, must report. If you are required to file a report and fail to do so, there are monetary fines of $500 per day and the potential to be charged criminally, with a maximum prison sentence of two years.

Not only are you required to file an initial disclosure form, but you must update your entity information or beneficial ownership information if and when anything changes. All forms must be filed by no later than December 31, 2024. If you file a form and your information changes, you have three months to update the information with FinCEN.

Additional information about the reporting requirements, including answers to questions such as “is my company required to report beneficial ownership information to FinCEN,” “who is a beneficial owner,” and “when do I need to report my company’s beneficial ownership information” is available on FinCEN’s beneficial ownership information webpage, https://www.fincen.gov/boi. 

While the responsibility for the required disclosures is that of the entity, GGW Law is able to assist with the analysis of your entity structure to determine if your entity is considered a Reporting Company, and, if so, determining its beneficial owners and in most cases, reporting the required information to the federal system on your behalf.

If you have any questions, please contact attorney Lindsey Weidenbach by email at lindsey@ggw-law.com.