The Corporate Transparency Act

Harvard Business Services, Inc. has developed a FAQ page to provide you with an overview of the New Corporate Transparency Act that will take effect on January 1, 2024. Below we have put together several key questions and answers.

Does Harvard Business Services offer to file the FinCen Report?

Harvard Business Services has partnered with FinCEN Report Company to help make the process of filing the Beneficial Ownership Information for the new Corporate Transparency Act simple and easy. For only $199 per year FinCEN Report Company will help your company stay compliant with the Beneficial Ownership Information Report. 

What is the Corporate Transparency Act?

The Corporate Transparency Act (CTA) was enacted by Congress in 2020.  The CTA empowers the Financial Crimes Enforcement Network (FINCEN) of the U.S. Treasury to collect disclosures of Beneficial Ownership Information (BOI) for many Corporations, LLCs and similar entities created in or registered to do business in the United States. Congress hopes that the law will help prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity. The CTA authorizes FINCEN to collect BOI and disclose it to authorized government authorities and financial institutions. For more information https://www.fincen.gov/boi.

Here are excellent resources created by FinCEN Report Company to clarify the CTA

• Get Informed and Prepare for CTA Compliance
• The Corporate Transparency Act: Understanding Your Reporting Obligations

When does the Corporate Transparency Act go into effect?

The Corporate Transparency Act goes into effect on January 1, 2024.

What does The Corporate Transparency Act require?

For covered entities created or registered to do business on or after January 1, 2024, you must identify the individual who directly filed the document with specified governmental authorities that created the entity or registered it to do business, as well as the individual who was primarily responsible for directing or controlling such filing. The Corporate Transparency Act also requires the company to disclose information about individuals who exercise "substantial control" over the company, called beneficial owners.

What is a "benefical owner" under the CTA?

A benefical owner is an individual who, directly or indirectly, owns or controls 25% or more of the equity interests in a company or who exercises substantial control over the company in other ways. The CTA defines substantial control broadly, encompassing those who have significant infulence over the management or decision-making processes of the company. A business will need to submit all Beneficial Ownership information for each of these individuals associated with the company. 

What companies are exempt or excluded from the Corporate Transparency Act?

There are 23 exemptions which you can read more about on Page 10 of the Small Entity Compliance Guide.
One of the key exemptions would apply to any “large operating company” that:
(A) Employs more than 20 full time employees in the United States, with “full time employee in the United States” having the meaning provided in 26 CFR 54.4980H–1(a) and 54.4980H–3, except that the term “United States” as used in 26 CFR 54.4980H–1(a) and 54.4980H–3 has the meaning provided in § 1010.100(hhh);
(B) Has an operating presence at a physical office within the United States; and
(C) Filed a Federal income tax or information return in the United States for the previous year demonstrating more than $5,000,000 in gross receipts or sales, as reported as gross receipts or sales (net of returns and allowances) on the entity's IRS Form 1120, consolidated IRS Form 1120, IRS Form 1120–S, IRS Form 1065, or other applicable IRS form, excluding gross receipts or sales from sources outside the United States, as determined under Federal income tax principles. For an entity that is part of an affiliated group of corporations within the meaning of 26 U.S.C. 1504 that filed a consolidated return, the applicable amount shall be the amount reported on the consolidated return for such group.

What does a non-exempt reporting company need to report?

A non-exempt reporting company must include in its BOI Report:

1. Its legal company name, and any trade name or Doing Business As (DBA);
2. Physical Business Address;
3. The Jurisdiction in which it was formed or first registered, depending on whether it’s a U.S. or foreign company; and
4. Its Taxpayer Identification Number (TIN).

1. Full Legal Name
2. Birthdate
3. Home residential address
4. Unique Identifying Number from a Driver’s license ID or Passport
5. An image of the document that provide the unique identifying number

In addition, any reporting company formed (or registered to do business) on or after January 1, 2024, must also identify its “company applicant” and provide the five pieces of Personal Identifiable Information (PII) indicated above for the company applicant.

Who can access my beneficial owner information?

Access to Beneficial Ownership Information is limited to only specific authorized entities. Typically tax authorities, financial intelligence units, and law enforcement agencies with have access to the BOI to ensure compliance with anti-money laundering laws. the information on these reports is otherwise confidential and protected, so the public will not have access to your beneficial ownership information.

When is the Corporate Transparency Act Beneficial Ownership Report required to be filed?

The initial report if your company is created before January 1, 2024, will be due by January 1, 2025. If your company is created or registered on or after January 1, 2024, the initial report is due within 90 calendar days after formation.

Is there a fee to file the report? Is this something I have to do every year?

There is no fee to file the CTA report. It is not an annual report, but anytime any item of previously-reported information concerning any beneficial owner changes, the company must amend its BOI Report within 30 calendar days after the date of the change.

What is a FINCEN Identifier Number, and who needs one?

Individuals who anticipate being identified in multiple BOI Reports for multiple reporting companies may apply to FinCEN to obtain a unique “FinCEN Identifier.”  Such an individual may provide their FinCEN Identifier to reporting companies in lieu of providing their personal identifiable information (PII).  Applying for a FinCEN Identifier, however, obligates the individual to update their FinCEN Identifier application with FinCEN within thirty calendar days after any item of their personal identifiable information (PII) changes.  The individual will maintain this obligation for life.

What is an Applicant and who is the applicant?

A company applicant is:
(1) For a domestic reporting company, the individual who directly files the document that creates the domestic reporting company;
(2) For a foreign reporting company, the individual who directly files the document that first registers the foreign reporting company; and
(3) Whether for a domestic or a foreign reporting company, the individual who is primarily responsible for directing or controlling such filing if more than one individual is involved in the filing of the document.
In its public statements, FinCEN has explained that it interprets this definition to permit there to be as many as two persons (but not more than two) who may be a reporting company’s “company applicant.”

I have legal or tax accounting questions regarding the CTA?

Harvard Business Services is neither a law firm nor an accounting firm. Many of our clients have worked with Taylor English Duma LLP for their legal services including advice on tax matters. Harvard Business Services is not affiliated with Taylor English Duma LLP, and their legal services are entirely separate from Harvard Business Services. 

You can also visit our blog to read Corporate Transparency Act themed articles.