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Corporate Transparency Act

August 29, 2023


What is the Corporate Transparency Act?

The Corporate Transparency Act (CTA) will require certain companies to report information about the company and its beneficial owners to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). The purpose of the Corporate Transparency Act is to protect the U.S. financial system from corruption by requiring companies to report beneficial ownership information (BOI). The hope is that this transparency will make it more difficult for criminals to use companies as fronts for illegal activity.


When does the Corporate Transparency Act take effect?

The Corporate Transparency Act was part of the 2021 National Defense Authorization Act and the new reporting requirements will take effect January 1, 2024. Entities will have one year, through January 1, 2025, to file their initial BOI reports. However, there is a chance that the Protecting Small Business Information Act of 2023 will delay the effective date until all rules required under the CTA have been issued and are final. Either way, it is important to start thinking about this now and preparing for its implementation.


Who is required to file?

Domestic and foreign companies who are registered to do business in the U.S. by filing a document with the secretary of state or similar office are required to file.

However, there are several exemptions, including the following:

  • Large operating companies (20 or more full-time U.S. employees, more than $5 million in U.S. revenue, and have a physical operating presence in the U.S.)
  • Companies registered with the Securities and Exchange Commission (SEC)
  • Banks
  • Insurance Companies
  • Tax-exempt entities
  • Accounting firms
  • Public utilities companies
  • Registered Commodity Exchange Act entities, registered investment companies or advisors, etc.

If you are unsure if you are required to file, reach out to your Wilkins Miller advisor.


What is reported in the corporate transparency report?

  • The company’s full name
  • Any trade name or DBAs
  • Business street address
  • Jurisdiction of formation
  • Taxpayer Identification Number


Who is considered a beneficial owner?

An individual who directly or indirectly exercises substantial control over the reporting company or owns or controls at least 25% of the reporting company’s ownership interests.


Who is considered a company applicant?

The individual who filed the application/documents to form the company as a corporation, LLC, etc.


What needs to be reported for the beneficial owner(s) and company applicant?

  • Name
  • Birthdate
  • Address
  • A unique identifying number from an acceptable official document (Ex: passport or driver’s license)


What are the consequences of noncompliance?

There are some significant consequences associated with not complying with the BOI reporting requirements. Willfully not complying can result in civil penalties of $500 per day up to $10,000 for as long as the violation exists and criminal penalties up to 2 years of prison time. This is why it is important to start considering if you are required to comply now and not to wait.

If you would like more information regarding the Corporate Transparency Act or are unsure if you are required to comply, consult your Wilkins Miller advisor.