Understanding the Corporate Transparency Act: A Summary

By: David K. Olive

The Corporate Transparency Act (CTA), enacted in January 2021, mandates that certain entities, such as corporations and limited liability companies (LLCs), disclose beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), a bureau of the United States Department of the Treasury.

Beneficial owners are required to report identifying information, including their full legal name, date of birth, current residential or business address, and a unique identifying number from an acceptable identification document, such as a passport or driver’s license. A “Beneficial Owner” is generally defined as anyone owning a 25% ownership interest in the company or any individual that exercises “substantial control” over the company.

This information must be submitted to FinCEN at the time of entity formation for newly formed entities and by the end of this calendar year for entities existing before January 1, 2024. There are potentially severe penalties for noncompliance, including both civil and criminal penalties.

Clients should ensure compliance with reporting requirements and stay informed about CTA developments to navigate the evolving regulatory landscape effectively.

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David Olive is an estate planning and business attorney with the law firm of Carnahan Evans PC. He can be reached at dolive@carnahanevans.com or 417-447-4400.