The Corporate Transparency Act (“CTA”) became effective January 1, 2024.  Many small businesses will be required to file a new report with the FBI’s Financial Crimes Enforcement Network (“FinCEN”), or risk civil and criminal penalties including fines of up to $500/day and up to two years in prison.

The CTA requires every corporation, limited liability company and every other entity created by a filing with the Indiana Secretary of State (e.g LLP’s) (a “reporting company”) to file a report with FinCEN unless an exemption applies. The report will identify, provide information about, and require a photo ID be submitted for each beneficial owner (and control person) for the entity. Existing reporting companies have until January 1, 2025, to file the required information. After the initial filing, a reporting company will have 30 days to file with FinCEN if there are any changes in information reported. Many companies are incorporating additional language in their company documentation requiring beneficial owners (and control persons) to notify them of changes.

The regulations do provide certain exemptions. Most notably exempted from the CTA disclosure requirements are: 1) large operating companies (i.e., those with more than 20 full-time employees, more than $5,000,000 in gross receipts or sales, and a U.S. based physical office), 2) banks/financial institutions, 3) publicly traded companies, 4) some tax-exempt entities, and 5) investment companies.

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://FinCEN.gov/BOI.

Yoder Ainlay Ulmer & Buckingham can assist clients in CTA compliance, including determining if there is an applicable exemption and doing the initial and subsequent FinCEN filings. CTA compliance is not within the scope of engagement unless and until it is added in a supplementary engagement letter and Yoder Ainlay Ulmer & Buckingham will not file any reports for entities unless we are specifically engaged to do so. If you would like to discuss this further, please contact a member of the Yoder Ainlay Ulmer & Buckingham Corporate Practice Group at (574) 533-1171.