What is the Corporate Transparency Act?
The Corporate Transparency Act (CTA) is a U.S. federal law that went into effect on January 1, 2024. Businesses that existed prior to January 1, 2024 have a year to comply. Companies that form after the start of this year have only 90 days in which to file.
This law created a new beneficial ownership information reporting requirement as part of efforts to make it harder for bad actors to hide. There are exceptions only for large institutions such as utility and insurance companies.
U.S. businesses must now report to FinCen the social security number, driver’s license, passport number and home address of all individuals with a controlling interest in that business on an annual basis. The penalties associated with noncompliance are thousands of dollars in fines and up to two years in federal prison.