The Corporate Transparency Act & Your Business
On January 1, 2021, Congress passed a set of provisions innocuously titled the Corporate Transparency Act (CTA) as part of the annual National Defense Authorization Act. This bill aims to help fight tax evasion, tax fraud, and other financial crimes by implementing a national database collecting registration information for all corporations and limited liability companies organized in the United States.
The reason why this is important is that when Congress said all, they truly meant all. As a result of the Corporate Transparency Act, all corporations, LLCs, and other entities registered with a state or Indian Tribe in the United States are subjected to these new reporting requirements. The Treasury Department has until the end of the year to promulgate the appropriate regulations, but all new or previously organized entities will have to comply with them.
The Corporate Transparency Act requires each beneficial owner to submit certain information to the Treasury Department upon registration of their business entity. A “beneficial owner” is an individual who exercises substantial control over the business entity, or owns or controls 25% or more of the ownership interest of the business.
Each beneficial owner will be required to submit the following information:
A full legal name
Their date of birth
A current residential or business street address
An identification document
The form of ID can be a passport, government ID, or driver’s license. Upon registration, this information will need to be submitted to the Treasury Department and must be kept updated if the entity remains in force.
It is never too early to begin preparing for the submission of this information. Bernick Lifson has been awaiting the Treasury Department’s final directions on how and when this information will need to be submitted. If you are looking for advice on how to handle these changes related to the Corporate Transparency Act and for assistance with other corporate transparency inquiries.