Client Alert: Corporate Transparency Act

Dec 7, 2023

As has been widely reported, in 2021 Congress enacted the Corporate Transparency Act (the “CTA”) to assist law enforcement efforts to counter money laundering, drug trafficking, terrorism, and other illegal undertakings.

The rules are complex and go into effect on January 1, 2024. They will likely apply to many Greenspoon Marder LLP clients.

FILING REQUIREMENTS AND TIMING

Unless an entity qualifies for an exemption from filing, starting on January 1, 2024, the CTA is scheduled to require millions of public and private companies (a “Reporting Company”) that were created by filing a document with a secretary of state in any U.S. state or territory¹ to report certain information about the Reporting Company itself, and about the individuals who directly or indirectly own or control that Reporting Company.

This must be done via a beneficial ownership information report (“BOI Report”) with the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”). The CTA authorizes FinCEN to disclose the beneficial ownership information to U.S. and foreign law enforcement, financial institutions, and other regulators under certain limited circumstances.

A Reporting Company includes corporations, limited liability companies, and limited partnerships, as well as certain business trusts and other entities. Two different deadlines apply: (1) all Reporting Companies created or registered after January 1, 2024, will be required to file within 90 calendar days of the date that the company was created or registered²; and (2) all Reporting Companies created or registered before January 1, 2024, will be required to file their initial report before January 1, 2025.

Such entities will be required to submit BOI Reports to FinCEN electronically through a secure filing system scheduled to start January 1, 2024, although FinCEN is still working to develop their electronic filing system.

EXEMPTIONS

Greenspoon Marder LLP’s corporate and tax attorneys can assist you in determining if your entity falls within one of the numerous exemptions from reporting.

FILINGS ALSO BY INDIVIDUALS

If your entity is not exempt, we can also assist you in determining, based upon information you provide to us, which individuals are considered to directly or indirectly own or control³ your Reporting Company and are therefore required to file certain personal information as part of the BOI Reports under the broad definitions contained in the CTA and FinCEN regulations. However, please be advised that Greenspoon Marder LLP cannot take any action on your behalf concerning the CTA without being engaged in writing specifically for this purpose.

PENALTIES

The obligation to report falls upon each non-exempt Reporting Company and each Beneficial Owner. Individuals face civil penalties of $500 per day (up to a total of $10,000), and criminal penalties of up to two years in prison for willful violations of the CTA.

BE ALERT TO FRAUDULENT ALERTS

Please also be aware that FinCEN has posted an alert on its website stating that it has been notified of recent fraudulent attempts to solicit information from individuals and entities who may be subject to reporting requirements under the CTA. The fraudulent correspondence may be titled “Important Compliance Notice” and asks the recipient to click on a URL or to scan a QR code. FinCEN has stated that it does not send unsolicited requests and that companies should not respond to these fraudulent messages, nor click on any links or scan any QR codes within them.

CONTACTING US

To determine whether and how you need to comply, please contact one of the Greenspoon Marder LLP lawyers who represents you, or our CTA team at [email protected].

[1] Certain entities created in foreign countries and registered to do business in the United States must also file a BOI Report.
[2] A Reporting Company created or registered after January 1, 2024, will also have an obligation to report its “Company Applicant(s)” as part of its BOI Report.
[3] Reporting direct ownership or control is not sufficient. The new law requires persons who indirectly (even through multiple layers of intervening entities) own or control certain rights in the Reporting Company to also report certain personal information.

Disclaimer: This Greenspoon Marder LLP Client Alert is issued for informational purposes only and is not intended to be construed or used as general legal advice nor a solicitation of any type. Please reach out to your primary Greenspoon Marder LLP contact if you have any questions regarding the currency of this information. The hiring of a lawyer is an important decision. Before you decide, ask for written information about the lawyer’s legal qualifications and experience.

About Greenspoon Marder

Greenspoon Marder LLP is a full-service law firm with over 225 attorneys and more than 20 office locations across the United States. With operations from Miami to New York and from Denver to Los Angeles, our firm attracts some of the nation’s top talent in key markets and innovation hubs. Our core practice areas include Real Estate, Litigation, and Transactional Services, complemented by the capabilities of a full-service firm. Greenspoon Marder has maintained a spot on The American Lawyer’s Am Law 200 as one of the top law firms in the U.S. since 2015, and our goal is to provide exceptional client service by developing a thorough understanding of each client’s business needs and objectives in order to provide strategic, cost-effective solutions.

MEDIA CONTACT

Natalie Villanueva, Director of Marketing
954.333.4308 | [email protected]

This Greenspoon Marder LLP Client Alert is issued for informational purposes only and is not intended to be construed or used as general legal advice nor a solicitation of any type. Please contact the author(s) or your Greenspoon Marder LLP contact if you have any questions regarding the currency of this information. The hiring of a lawyer is an important decision. Before you decide, ask for written information about the lawyer’s legal qualifications and experience.

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Client Alert: Corporate Transparency Act

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