The Corporate Transparency Act (CTA) is a federal law that mandates certain businesses, including LLCs and corporations in Florida and across the United States, to disclose specific personal information about their beneficial owners and senior officers to the federal government. This law, administered by the Financial Crimes Enforcement Network (FinCEN), is designed to enhance transparency and combat financial crimes such as money laundering.

Enacted by the U.S. Congress in 2019, the CTA aims to increase transparency by requiring small LLCs and corporations to provide details about their beneficial owners. Beginning January 1, 2024, all Florida LLCs and other applicable businesses must submit this information. Non-compliance can lead to significant civil and criminal penalties.

Which Businesses Are Required to Submit CTA Reports?

The CTA applies to all “Reporting Companies,” which include LLCs, corporations, and other entities that are formed or registered to conduct business in the United States through a state filing, such as Articles of Organization. However, certain large companies with over 20 full-time employees, public companies, nonprofit organizations, and other sizable businesses are exempt from this requirement.

Trusts are generally not required to submit reports under the CTA. However, if a trust is the beneficial owner of a Reporting Entity, information about the trust beneficiaries must be included in the report. For instance, if a trust owns 25% or more of the membership interest in an LLC, the beneficial ownership information for the trust must be reported.

What Information Must Be Included in CTA Reports?

Reporting Companies must submit beneficial owner information to FinCEN. This can be done electronically through the FinCEN filing system.

The required information includes the Reporting Company’s full legal name, any fictitious names, its physical address (P.O. boxes are not acceptable), its state of formation, and its business tax number. Additionally, personal details about the company’s beneficial owners must be provided, including their full legal name, date of birth, complete residential address (no P.O. boxes), and a copy of a state-issued identification, such as a driver’s license or passport.

Are You Considered a Beneficial Owner Under the CTA?

You are considered a beneficial owner of an LLC or other business entity if you directly or indirectly hold at least 25% ownership in the Reporting Company. Ownership can include any form of equity, including options. The term “beneficial owner” also extends to “Senior Officers” who have substantial control over the Reporting Company, such as corporate officers and LLC managers.

What Are the Filing Deadlines for FinCEN Reports?

Florida LLCs and other entities formed before January 1, 2024, must submit their FinCEN reports regarding beneficial owners and senior officers by January 1, 2025.

Entities formed after January 1, 2024, have 30 days from their formation date to file the required information with FinCEN. This includes providing details about the person who filed the organizing documents, such as an employee or agent who submitted the LLC’s Articles of Organization with the Florida Secretary of State.

It’s important to note that there are no annual reporting requirements. Each Reporting Entity is required to file only once with FinCEN unless there are changes in the reported information.

What Should You Do If There Are Changes in Beneficial Ownership or Company Details?

Any changes in the information initially provided to FinCEN, such as an address change, must be reported within 30 days. This includes updates to the Reporting Entity’s address or the residential address of a beneficial owner. Failure to file an amendment within this timeframe is considered a violation and may result in civil penalties.

What Are the Penalties for Non-Compliance with CTA Filing Requirements?

Non-compliance with the CTA can lead to both civil and criminal penalties. Failure to file a FinCEN report within the required timeframe can result in a daily fine of $500, with no maximum limit. Willfully submitting incorrect or incomplete information can lead to more severe consequences, including a criminal fine of up to $10,000 and a potential prison sentence of up to two years.

Will FinCEN Make Your Personal Information Public?

The personal information submitted to FinCEN is not intended to be publicly accessible online. However, it may be disclosed to federal and state law enforcement agencies in certain situations and to financial institutions with the prior consent of the Reporting Company.

Do You Need to Provide Personal Information for Each Reporting Company?

You can submit your personal information and government-issued identification to FinCEN once and obtain a unique FinCEN ID number. This ID number can then be used for multiple Reporting Companies, eliminating the need to repeatedly provide the same information. This option is particularly useful for individuals involved in the formation or management of several LLCs.

Where Can You Find More Information About CTA Reporting?

For more detailed information about CTA reporting requirements, you can visit the FinCEN website. It’s also advisable to consult with an attorney or a CPA to ensure compliance with the CTA and avoid costly penalties.

Stay ahead of the CTA requirements and protect your business from penalties with expert legal guidance from Lumsden Law Firm. Contact us today to learn how we can assist you in navigating these new reporting obligations.