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NEW LAW FOR BUSINESSES!

Corporate Transparency Act
What Your Business Needs to Know

New Law Affecting Businesses in 2024

A new law affecting business entities becomes effective January 1, 2024, and the lawyers at Hourigan, Kluger and Quinn, P.C., want to give you an insight into the law’s requirements. Please note that this information is based on current guidance and may evolve. 

 

The Corporate Transparency Act (“CTA”) requires a range of organizations to electronically file a report with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) containing information on the business’s Beneficial Owners and Company Applicants. This message provides a summary of the key requirements of the Act and what you need to know to comply with the law. 

Hourigan, Kluger & Quinn can assist your business in navigating the filing requirements to properly comply with the law. For guidance tailored to your business, please email Attorney Tara Giarratano at tgiarratano@hkqlaw.com or call 570-287-3000. 

Who May Be

Beneficial Owners...

A company's beneficial owners are those individuals who, directly or indirectly, exercise substantial control over a company or own or control at least 25% of the ownership interests of the organization. Substantial control is broadly defined and can apply to anyone who can make important decisions on behalf of a business. Ownership interest is also broadly defined and can apply to rights that are not characterized as debt or equity.

Who May Be

Company Applicants...

Company applicants are individuals who directly file and are primarily responsible for filing, directing, or controlling the filing of the organization’s formation documents.

The CTA goes into effect on January 1, 2024.
Reports cannot be filed earlier. 

Companies created before January 1, 2024, do not have to report Company Applicant information, and will have until January 1, 2025 to report all other information, including Beneficial Owner information. 

 

New companies registered on or after January 1, 2024, must report all information listed below, including Company Applicant information within 30 days of receiving notice of an effective formation or registration. 

Covered Entities: 

The reporting rule applies to corporations, LLCs, and any other entity created by a filing with a Secretary of State or Indian tribe equivalent. The reporting rule also applies to foreign entities that are registered to do business in any state or tribal jurisdiction. 

Information Required to be Reported:

  • Business name and any d/b/a name

  • Business street address

  • Jurisdiction of formation (the state where the business was formed, which may be different than where it is currently located)

  • Identification number (TIN, EIN, etc.)

  • Full legal name, date of birth, current residential or business addresses. In addition, ID number from driver’s license or passport with picture of ID of a company’s Beneficial Owners and Company Applicants.

Upon change of any reported information, an updated report must be filed within 30 days. There is a 90-day grace period to correct a mistake or omission in a report. Willful failures to report can result in civil or criminal penalties. 

Your Business May Not Be Required to File.
The following entities are presently exempt from the CTA.

  • Companies with 20 or more full-time U.S. employees and more than five million in U.S. sourced revenue and a physical operating presence in the U.S.

  • Issuers registered with the SEC

  • Banks and other money services business registered with the U.S. Department of Treasury’s Financial Crimes Enforcement Network

  • Registered Commodity Exchange Act entities, registered investment companies or investment advisers, broker-dealers and registered venture capital fund advisers

  • Insurance companies or state-licensed insurance producers

  • Accounting firms

  • Public Utilities

  • Tax exempt entities

  • Inactive companies

    • Companies that were in existence before January 1, 2020 and

    • No longer engaged in active business and

    • Not owned by a foreign person, whether directly or indirectly or wholly or partially and

    • No change in ownership in preceding 12 month period and

    • Has not sent or received any funds over $1,000 directly or indirectly in the preceding 12 month period and

    • Holds no assets and has no ownership interest in any other entity.

HKQ is here to help your business comply with the law by properly filing the required information. 

Contact us with any questions.

Email Attorney Tara Giarratano at tgiarratano@hkqlaw.com or call 570-287-3000. 

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