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CTA Reporting

About CTA Reporting 

Serving Texas Business Owners in New Federal Regulations

The Corporate Transparency Act (CTA) is a significant piece of federal legislation enacted to enhance corporate ownership transparency. The CTA’s new regulations are designed to prevent corporate corruption through illicit business activities, such as using shell companies for money laundering, terrorism financing, tax violations, and other forms of corporate fraud or misconduct. 

This new law went into effect on January 1, 2024. It promotes more accountability and security within business environments. The CTA is expected to affect more than 90 percent of all U.S. businesses, and failure to comply with its new rules carries with it the possibility of significant fines and jail time. 

At CTA Reporting, our highly experienced team is well-versed in these new corporate reporting regulations. We can provide the legal guidance and assistance small business owners need for accurate and timely CTA compliance. 

Call CTA Reporting, LLC today at (469) 489-5805 or contact us online to schedule a consultation with our team.

Who Is Required To Report?

Entities existing before 2024 have 12 months to comply; new entities have 30 days (temporarily extended to 90 days). Any changes in address or ownership must be reported within 30 days. Reporting must be made to FinCEN, the federal Financial Crimes and Enforcement Network. Compliance deadlines may change with updates to FinCEN policy.

What is The Corporate Transparency Act (CTA)?

Before the enactment of the Corporate Transparency Act, the U.S. had been criticized for having lax regulations regarding identifying beneficial owners of corporations. Anonymous shell companies were used as vehicles for various illicit activities, including tax evasion, money laundering, and fraud. 

The lack of transparency in corporate ownership structures allowed individuals to hide their identities behind layers of legal entities, making it difficult for law enforcement agencies to trace and combat financial crimes. 

The primary intent behind the Corporate Transparency Act was to establish a more robust framework for collecting and maintaining information about the beneficial ownership of corporations. The CTA aimed to strike a balance between privacy concerns and the need for increased transparency in corporate structures.

Key Provisions of the CTA 

Beneficial Ownership Reporting

One of the key provisions of the Corporate Transparency Act is the requirement for certain entities to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. Beneficial owners are individuals who directly or indirectly own a significant interest in or exert substantial control over a reporting company. 

Who is Considered a Beneficial Owner?

The Act defines a beneficial owner as an individual who, directly or indirectly, exercises substantial control over or owns or controls at least 25% of the ownership interests in the corporation. 

Substantial control is determined by meeting any of the following criteria: 

  • An individual who is a senior officer
  • Someone who has the authority to appoint or remove certain officers or a majority of directors
  • Someone who is another important decision-maker
  • Someone has another form of substantial control 

This likely includes the President, CEO, CFO, COO, GC, and other executives. Decision-makers may consist of individuals with the authority to determine the business's nature and scope, sell, transfer, or lease principal assets, or amend organizational documents or corporate policies. These definitions may cast a broad net that each reporting company needs to carefully consider before filing.

Reporting Obligations

Entities falling within the scope of the Corporate Transparency Act must submit beneficial ownership information to FinCEN, including each beneficial owner's name, address, date of birth, and identification number. Additionally, reporting companies must provide updates to FinCEN within specific timeframes should any changes to the reported information occur.

Here are some criteria to determine who needs to file a report: 

  • Covered entities:
    • Corporations
    • Limited Liability Companies (LLCs)
    • Partnerships
    • Trusts registered with local, state, federal, tribal, or other regulatory bodies
  • Exclusions and exemptions: 
    • Publicly traded companies
    • Certain financial institutions
    • Certain large operating companies
    • Certain entities with substantial reporting requirements

FinCEN Database

The collected beneficial ownership information is stored in a confidential FinCEN database. This database is not accessible to the public but can be accessed by authorized government agencies, such as law enforcement and national security agencies, to investigate and combat financial crimes.

Are There Exemptions to CTA Reporting?

Certain types of entities are exempt from the reporting requirements, including publicly traded companies, certain financial institutions, certain large operating companies, and entities already subject to robust disclosure requirements. 

These exemptions are designed to avoid unnecessary regulatory burdens on entities already subject to transparency measures. Unless an exemption applies, all entities registered anywhere in the United States likely must comply. We recommend you consult with your legal counsel to verify your reporting requirements or contact us for a consultation.

Implementation Challenges

Some critics argue that the reporting requirements may impose additional administrative burdens on small businesses and raise concerns about privacy and the potential misuse of collected information. Striking the right balance between transparency and confidentiality remains a complex task. 

For persons reported on many reports, we can assist you in obtaining a FinCEN identifier. This number can be used when reporting your ownership information instead of listing your personal address and information on each report.  This lowers compliance costs by not having to update every report if information changes on just that individual.  For example, Mr. Dower lists his FinCEN identifier on the beneficial ownership information reports for Dallas Financial Solutions, Inc., CTA Reporting, LLC, and other reporting companies.  If he moves, he will only need to update his home address once – on the FenCEN identifier record – not several times.

International Implications

The enactment of the Corporate Transparency Act aligns with global efforts to combat money laundering and enhance financial transparency. The international community has recognized the importance of knowing the ultimate beneficial owners of legal entities to prevent and detect illicit economic activities.

Why Choose CTA Reporting, LLC?

  • Experienced Business Solutions
    Since 1999, our team has guided clients in real estate, retail, healthcare, finance, and more.
  • Free Consultations Available
    Talk through all of your legal options during a free consultation.
  • Virtual Consultations
    With virtual consultations, it's easier than ever to get started.
  • Client Focused Representation
    Committed to professionalism, our law firm provides personalized attention, aligning support with each client's unique needs.

What Information is Needed for Reporting?

Here is the information that you typically need to submit for reporting under the CTA:

  • Beneficial Owner Information: Full legal name, residential or business address, date of birth, and government-issued identification number
  • Ownership Interest Details: Percentage of ownership or nature of substantial control
  • Entity Information: Legal name or reporting entity and entity type
  • Filing and certification: Certification of accuracy and signature

How To File Under the Corporate Transparency Act

To file under the Corporate Transparency Act, follow these steps:

  1. Determine Eligibility: First, determine if your entity is required to report under the CTA. FinCEN filings are required for all newly formed corporations, limited liability companies (LLCs), limited partnerships, and any other entity whose existence is established by filing with a secretary of state in any state.
  2. Identify Beneficial Owners: Anybody who exercises significant control over the entity or directly or indirectly controls 25% or more of the ownership interests is considered a beneficial owner. Gather precise data from a valid identification document concerning every beneficial owner, such as their entire legal name, birthdate, address, and unique identification number from a non-expired driver’s license or passport.
  3. Prepare and Submit Report: Complete the reporting form through FinCEN’s  electronic filing system: BOI E-Filing. Make sure that all of the information is current and accurate.

A CTA reporting specialist should be consulted to assist you with the filing procedure and guarantee compliance, as the CTA implementation is a dynamic process. It may also be helpful to  periodically check FinCEN for updates.

How CTA Reporting Can Help You

The CTA aims to address the vulnerabilities in the U.S. corporate ownership landscape. It contributes to the global fight against financial crimes by requiring the disclosure of beneficial ownership information. As implementation progresses, it will be essential to monitor its impact on corporate practices, law enforcement efforts, and the overall integrity of the financial system.

Compliance with the CTA is not optional, and failure to timely report beneficial ownership information is punishable by substantial fines and jail time. 

Our firm has partnered with a robust, secure platform to streamline the CTA reporting process. Once we have all of the information to complete the report, our team will review each submission. We are also available to answer any questions you may have.

CTA Reporting is dedicated to ensuring that our business clients fully comply with this new federal law while providing solutions to help you prosper in your business endeavors. 

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