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December 2023

Preparing for the Corporate Transparency Act

The Corporate Transparency Act takes effect on January 1, 2024. 

The CTA is a sweeping new law that imposes extensive reporting obligations on all entities that do not meet its listed exemptions. Below, the Business Transactions team explores whether or not your company has to report its beneficial owners to the U.S. Treasury's Financial Crimes Enforcement Network ("FinCEN").

What is a “reporting company”?

A reporting company includes all entities, unless an exemption applies, that are formed or registered to do business in the United States by the filing of a document with a Secretary of State or any similar office, and includes corporations, limited liability companies, limited partnerships, family limited partnerships, and certain trusts that have a Secretary of State filing requirement.  See 23 Exemptions.

Most companies that do not have more than 20 full-time employees and at least $5 million in gross receipts will be required to report their beneficial owners. A beneficial owner is an individual who either directly or indirectly: (1) exercises substantial control over the reporting company or (2) owns or controls at least 25 percent of the reporting company’s ownership interests. The determination of a beneficial owner is a complex analysis. See Beneficial Owner Information.  The CTA is projected to affect 32 million companies in the United States.

When must a reporting company file its report?

Companies in existence as of January 1, 2024, must report to FinCEN by January 1, 2025. Forms are not yet available on the FinCEN website. After January 1, 2024, forms can be filed here.

New companies formed or registered to do business after January 1, 2024, must report to FinCEN within 90 days of such formation or registration. Any changes to previously submitted reports must be reported on an amended filing within 30 days of the change.

What are the consequences for failure to timely or accurately file?

Civil and criminal penalties (up to $10,000 and two years imprisonment) can be levied for providing false information, failing to provide complete information, or failing to update information. There are no extensions of time for filing the required form with FinCEN.  Similarly, there are no provisions under the CTA excusing late filing or abatement of penalties for reasonable cause.

For additional information, please see the Small Entity Compliance Guide or contact a partner in the GRSM Business Transactions group, including the following GRSM team members:

Craig Heryford at
Ronit Stone at
Carol Schaner  at
Elizabeth Hitt at

This client alert does not constitute legal advice nor does it create an attorney-client relationship. Should you require legal services regarding a particular matter, please reach out directly to one of our attorneys.

Advertising & E-Commerce

Craig S. Heryford
Elizabeth L. Hitt
Carol P. Schaner
Ronit M. Stone

Advertising & E-Commerce
Business Transactions