Key Provisions of the Corporate Transparency Act (CTA)

Beneficial Ownership Reporting:
Under the CTA, companies are required to disclose information about:

• Individuals who directly or indirectly own or control 25% or more of the entity.

• Individuals who exercise substantial control over the entity.

Who Must Report:
The CTA applies to most domestic and foreign entities registered to do business in the U.S., including:

• Limited Liability Companies (LLCs)

• Corporations

• Other similar entities

Exemptions:
Certain entities are exempt from reporting, such as:

• Large operating companies (those with more than 20 full-time employees and over $5 million in gross receipts)

• Regulated entities (e.g., banks, credit unions, insurance companies)

• Certain tax-exempt organizations

Current Status of Reporting Deadlines:
Due to a nationwide preliminary injunction reinstated on December 26, 2024, all BOI reporting requirements are currently paused. This means:

• New Entities: No obligation to file BOI reports at this time.

• Existing Entities: Reporting deadlines for entities formed before January 1, 2024, are also on hold.

Entities are not required to submit BOI reports while the injunction is in place, though voluntary reporting is still accepted.

Information Required (When Enforced):
If enforcement resumes, reporting companies will need to provide:

• Full name

• Date of birth

• Residential or business address

• Unique identifying number from an acceptable form of identification (e.g., passport, driver’s license)

Confidentiality and Access:
The reported BOI will be kept confidential and is accessible only to:

• Authorized government authorities

• Financial institutions (with customer consent)

• Law enforcement agencies

Penalties for Non-Compliance (When Enforced):
If reporting requirements are reinstated, non-compliance may result in:

• Civil penalties of up to $591 per day.

• Criminal penalties, including fines up to $10,000 and potential jail time of up to two years for willful violations.

Importance of Compliance:
The Corporate Transparency Act aims to combat money laundering, tax evasion, and other financial crimes by increasing the transparency of corporate ownership. While enforcement is currently paused, preparing for compliance is essential in case the requirements are reinstated.

Stay informed and monitor updates as the legal situation evolves.