Reminder: The Corporate Transparency Act

The Corporate Transparency Act (CTA) went into effect on January 1, 2024, requiring companies to report information about "beneficial owners"—those who own at least 25% of or exercise substantial control over the reporting company. Newly formed Companies that fall under the definition of “Reporting Companies” will need to file the Beneficial Ownership Information (“BOI”) report with the Financial Crimes Enforcement Network (“FinCEN within 90 days of formation.  Reporting Companies formed prior to January 1, 2024 will have until January 1, 2025 to file the BOI report with FinCEN.

The law exempts certain categories of businesses such as significantly tax-exempt entities and large operating companies. Large operating companies, put simply, have more than 20 full-time employees in the United States, a physical office in the United States and more than $5 million in U.S. gross receipts. 

Trusts are exempt from filing under the Act unless they own an interest in or control a Reporting Company.  For trusts that own an interest in a Reporting Company, the following individuals will be considered beneficial owners:

• Any trustee, direction advisor, protector, designated representative or other individual acting on behalf of the trust (whether a fiduciary under state law or not):
  • Who has the power to dispose of trust assets when the trust(s) and such individual (collectively) holds at least a 25% ownership interest in the reporting company;
  • Who controls a majority of the voting power or voting rights of the reporting company;
  • Who directs, determines or has substantial influence over important decisions made by the reporting company;
  • With the right to remove and replace senior officers of the reporting company;
  • With the right to remove and replace a majority of the board of directors of the reporting company;
• Any trustee of a trust(s) that owns a majority of the voting power or voting rights in the reporting company; and
• Remainder beneficiaries and permissible appointees of a power of appointment likely are not considered beneficial owners because of the inheritance exception. Accordingly, a minor child is excluded from the definition of Beneficial Owner if information about a parent or legal guardian for that child is disclosed as the Beneficial Owner. An individual acting as nominee, intermediary, custodian, or agent is not a Beneficial Owner because that person does not ultimately control or economically benefit from the entity.

Don’t wait until the end of the year, secure your FinCEN Identifiers as soon as possible.  Should you have any questions about the CTA requirements, or if you would like us to assist you, please contact cta@jeffreyburr.com.  For more information, please visit www.fincen.gov.