A push for greater transparency might mean landowners have to supply more information to comply. On January 1st, the federal Corporate Transparency Act (CTA) went into effect. It could impact small businesses, corporations, and limited liability companies with the goal of stopping money laundering, the financing of terrorism, and tax fraud.
The International Association of Administrators analyzed the requirements of what information will be required.
Company Information
- Company’s legal name
- Trade names used by the company
- Principal place of business’ street address
- Taxpayer identification number
The CTA necessitates disclosure for what it defines as “beneficial owner information” or BOI.
Beneficial Owner Information
- Individual’s legal name, date of birth, and residential address
- Unique identifying number from acceptable identification document
- Name of state/jurisdiction issuing that document
- Image of the document
The Financial Crimes Enforcement Network (FinCEN) says that beneficial owner information “refers to identifying information about the individuals who directly or indirectly own or control a company.” FinCEN will play a key role in implementation and enforcement of the CTA.
FinCEN laid out access and safeguard provisions of the CTA, which it describes as the “Access Rule.”
“In accordance with the CTA, the Access Rule provides access to BOI to Federal agencies engaged in national security, intelligence, or law enforcement activity; State, local, and Tribal law enforcement agencies with court authorization; foreign law enforcement agencies, judges, prosecutors, and other authorities that meet specific criteria; financial institutions with customer due diligence requirements and regulators supervising them for compliance with such requirements; and U.S. Department of the Treasury (Treasury) officers and employees. Each category of authorized recipients is subject to security and confidentiality protocols aligned with applicable access and use provisions.
This Access Rule follows the final BOI Reporting Rule FinCEN issued on September 30, 2022, which requires certain corporations, limited liability companies, and other similar entities created in or registered to do business in the United States to report to FinCEN information about themselves, their beneficial owners, and, in some cases, their company applicants to help authorized BOI recipients protect national security, enforce laws, and promote other policy objectives identified in the CTA.”
RELATED: The Financial Crimes Enforcement Network provides this detailed resource on the new provisions of the Corporate Transparency Act, along with a compliance guide and webinar on reporting requirements. Access those here.
Sole proprietorships and general partnerships are generally exempt from the new federal requirements, according to the International Association of Administrators. Also exempt are businesses that are already regulated, e.g., financial institutions, publicly traded companies, and insurance companies.
RELATED: The International Association of Commercial Administrators provides additional information on the Corporate Transparency Act, including important dates, reporting exemptions, and punishments for failure to comply. Check those out here.
“The purpose is to find out who is doing business in the United States,” said U.S. Representative John Garamendi — a Democrat who represents an area between San Francisco and Sacramento in northern California – told KGO-TV in San Francisco.
Garamendi, who has been in public service for half a century in various roles (California State Assembly, California State Senate, Deputy Secretary of the Interior and U.S. house of representatives)—supported the CTA and hopes that it provides more information to the public about business owners.
“The beneficial owners or the people who are receiving benefit from the corporation or from the LLC or partnership will have to disclose who they are,” he explained.
