PREPARING FOR THE CORPORATE TRANSPARENCY ACT
November 16, 2023
On January 1, 2024, the Corporate Transparency Act (“CTA”) will come into effect and significantly revise current disclosure requirements for nearly every entity engaging in commerce in the United States. Under the CTA, all “reporting companies” will be required to disclose beneficial ownership information (“BOI”) to the U.S. Treasury’s Financial Crimes and Enforcement Network (“FinCEN”). A “reporting company” includes all entities that are formed or registered to do business in the United States by filing of a document with a secretary of state or similar offices, such as corporations, LLCs, LLPs, etc., subject to various exemptions. If an entity is not created with this type of state filing, like most trusts, the entity is exempt from the CTA. The CTA also exempts “large operating companies.” CTA defines a large operating company as any business that employs more than 20 full-time employees, earns more than $5 million in revenue, and has an operating presence at a physical office in the United States. The CTA creates 23 total exemptions from its reporting requirements. Failure to comply with the CTA can result in civil and criminal penalties. Businesses and industry leaders should take proactive steps to determine their specific status as either a “reporting company” or an exempt entity under the CTA. Companies should take necessary steps now to ensure compliance in 2024.
If you have any questions, please contact Evelyn Sahr at 202.659.6622 or esahr@eckertseamans.com; Drew Derco at 202-659-6665 or dderco@eckertseamans.com; Jay Julien at 202.659.6648 or jjulien@eckertseamans.com, or any other attorney at Eckert Seamans with whom you have been working.
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