Corporate Transparency Act: How to File
Understanding the Corporate Transparency Act (CTA) and how to file under it is crucial for businesses, especially those registered in the United States. This act, which came into effect in January 2021, aims to combat money laundering and financial crimes by requiring certain businesses to disclose their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). In this detailed guide, we will walk you through the process of filing under the Corporate Transparency Act.
What is the Corporate Transparency Act?
The Corporate Transparency Act (CTA) is a United States federal law that requires certain legal entities to file information about their beneficial owners with FinCEN. The act was passed as part of the Anti-Money Laundering Act of 2020 and is designed to help financial institutions and law enforcement agencies identify and prevent the use of shell companies for money laundering, tax evasion, and other financial crimes.
Who Must File Under the Corporate Transparency Act?
Not all businesses are required to file under the Corporate Transparency Act. The following types of entities must file:
| Entity Type | Description |
|---|---|
| Corporations | For-profit corporations organized under state law. |
| Limited Liability Companies (LLCs) | Business entities that limit the owners’ liability for the company’s debts and obligations. |
| Partnerships | Business entities formed by an agreement between two or more persons to carry on a business for profit as co-owners. |
| Trusts | Legal arrangements through which property is managed for the benefit of one or more beneficiaries. |
Additionally, certain foreign entities that are conducting business in the United States must also file under the CTA.
What Information Must Be Provided?
When filing under the Corporate Transparency Act, businesses must provide the following information:
- Name and address of the entity: The legal name and registered address of the business.
- Principal place of business: The address where the business conducts its primary operations.
- Effective date of formation: The date the business was formed or registered.
- State of formation: The state where the business was formed or registered.
- Unique identifier: A unique identifier assigned to the business by the state of formation.
- Information about beneficial owners: The legal name, date of birth, address, and a unique identifier for each beneficial owner who owns or controls more than 25% of the entity or has significant control over the entity.
How to File Under the Corporate Transparency Act
Filing under the Corporate Transparency Act can be done through the FinCEN’s online filing system, known as the Beneficial Ownership Secure File Transfer (BOOST) system. Here’s a step-by-step guide on how to file:
- Register for an account: Visit the FinCEN website and create an account using your email address and a password.
- Complete the filing: Log in to your account and complete the filing form. You will need to provide the required information about your business and its beneficial owners.
- Submit the filing: Once you have completed the form, submit it through the BOOST system. You will receive a confirmation number upon successful submission.
- Keep a copy: Make a copy of the filing form and confirmation number for your records.
Penalties for Non-Compliance
Failure to comply with the Corporate Transparency Act can result in penalties, including fines and imprisonment. The severity of the penalty depends on the nature and extent of the non-compliance. It is, therefore, essential to ensure that your business complies with the act’s requirements.
Conclusion
The Corporate Transparency Act is an important piece of legislation that aims to combat financial crimes. By understanding the act and how to file under it, businesses can ensure compliance and avoid potential penalties. If you have any
