Under the Corporate Transparency Act (CTA), which took effect January 1, 2024, many business entities including small limited liability companies (LLCs) and partnerships are required to file reports with the Treasury Department’s Financial Crime Enforcement Network (FinCEN). In these filings, applicable businesses must disclose important information about their entity. However, recent developments have called into question the constitutionality of these requirements.
What Is the Corporate Transparency Act, and What are the Requirements?
The CTA is a federal law that requires business entities, referred to as reporting companies, to disclose certain information about the company and its owners to FinCEN. Under the CTA, a reporting company is defined as a corporation, LLC, or similar entity that is (i) created by filing a document with the secretary of state or a similar office under the laws of a state or Indian tribe, or (ii) formed under the laws of a foreign country and registered to do business in the United States.[1] The following information about reporting companies in the United States must be included in the report:[2]
- the company’s full legal name and any trade name or doing business as (d/b/a) name
- street address of the principal place of business
- jurisdiction where the business was formed
- tax identification number
Additionally, the reporting company must provide the following information to FinCEN about its beneficial owners, defined as persons who hold significant equity (25 percent or more ownership interest) in the reporting company or who exercise substantial control over the reporting company:[3][4]
- full legal name
- date of birth
- current residential or business address
- unique identification number from an acceptable identification document or FinCEN identifier
For reporting companies created on or after January 1, 2024, the same information must be provided about the company applicant, the person that files the creation documents for the reporting entity.[5]
[1] 31 U.S.C. § 5336(a)(11).
[2] 31 C.F.R. § 1010.380(b)(1)(i).
[3] 31 U.S.C. § 5336(a)(3)(A).
[4] 31 U.S.C. § 5336(b)(2)(A).
[5] Id.