The Corporate Transparency Act

Published: September 24, 2024

As your trusted advisor, we strive to keep you informed on legal, regulatory, and policy changes that could impact your financial life. Here is an important update for 2024.

The Corporate Transparency Act (CTA)

The CTA is a new federal law, effective January 1, 2024, that will impact the owners, principals, and other control persons involved in almost all U.S. or foreign LLCs, corporations, limited partnerships, business trusts, and other closely held entities that were created by, or, in the case of foreign entities that were registered to do business in the U.S., through the filing of a document with the secretary of state or any similar office in the U.S.

Congress enacted the CTA as part of an overall effort to fight money laundering, terrorism, tax evasion, and other criminal financial activity. This is accomplished by requiring “reporting companies” to file information with the federal government about those who control or own interests in them.

It mandates “reporting companies” to file reports with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury, detailing information on the companies and the underlying “beneficial owners,” and, in certain instances, “company applicants.”

Key Points:

  • Existing Companies: For companies in existence as of January 1, 2024, the first filing is due by January 1, 2025.
  • New Companies: For new companies created in 2024, the first filing is due within ninety days of the formation.
  • Future Entities: For entities formed on or after January 1, 2025, the first filing is due within thirty days of formation.

There are no extensions granted, and failure to file will result in severe civil and criminal penalties. Many small family businesses, which are often closely held entities, will be affected. If you are an owner or considered a significant control person of a closely held business, you may be responsible for filing with FinCEN.

 

For more information on what this may mean for your business and you, please review additional information and resources at FinCEN and Wolters Klower, a global information and services provider. Please consult your attorney and/or accountant to determine if you are affected and what actions you need to take.

We hope this information helps keep you up to date on regulatory developments. You’ll find News and Insights on our website and can view our educational webinars on a variety of financial topics on our YouTube channel. And please don’t forget to follow us on LinkedIn, Instagram, and Twitter.

Important Disclosures

This material is provided for informational or educational purposes only and should not be construed as investment, accounting, tax or legal advice. Always consult a financial, tax and/or legal professional regarding your specific situation. This communication is not intended as a recommendation or as investment advice of any kind. It is not provided in a fiduciary capacity and may not be relied upon for or in connection with the making of investment decisions. Nothing herein constitutes or should be construed as an offering of advisory services or an offer to sell or a solicitation to buy any securities or a recommendation to invest in any specific investment strategy. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future returns. The views expressed herein are as of a particular point in time and are subject to change without notice. The information and opinions presented herein are general in nature and have been obtained from, or are based on, sources believed by Klingenstein Fields Advisors (“KF Advisors’) to be reliable, but KF Advisors makes no representation as to their accuracy or completeness. Although the information provided is carefully reviewed, KF Advisors cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided. KF Advisors represents two investment advisers registered with the Securities and Exchange Commission: Klingenstein, Fields & Co., L.P. ® and KF Group, LP. If you are a KF Advisors client, please remember that it remains your responsibility to advise KF Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.