Corporate Transparency Act

Are You Prepared for the Corporate Transparency Act and the New York LLC Transparency Act?

 

            If you are an owner of a limited liability company, corporation, or other business entity, or plan to form one in the future, you are most likely subject to the Corporate Transparency Act and may be subject to New York’s corresponding New York LLC Transparency Act.  Failure to comply with the requirements of these statutes could result in substantial fines and penalties.

 

The Corporate Transparency Act (“CTA”)

 

            The CTA, which went into effect on January 1, 2024, requires that all US companies, and all foreign companies authorized to do business in the United States, provide specific and personally identifiable information about the entity, its beneficial owners and applicants to the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCen).

 

            There are 23 categories of companies that are exempt from filing reports with FinCen, including banks, insurance companies, accounting firms, tax exempt entities and large operating companies (as these entities are engaged in businesses that are subject to regulatory reporting and disclosures as a matter of course).  Aside from these exemptions, most companies will be required to file a report with FinCen by the end of 2024.

 

            Companies already in existence as of January 1, 2024, have until January 1, 2025 to file the initial report.  Any new company formed after January 1, 2024, but before January 1, 2025, is required to file the report with FinCen within 90 days of the date it is created or authorized to do business in any state.  Any new company formed after January 1, 2025 will be required to file the report with FinCen within 30 days of the date it is created or authorized to do business in any state.

 

            Failure to comply with the reporting requirements of the CTA can result in fines of $500 per day, and criminal penalties including imprisonment. 

 

            Addition information, and access to the filing system can be found on FinCen’s website: https://www.fincen.gov/boi

 

 New York LLC Transparency Act (“NYLTA”)

 

            The NYLTA, which will go into effect on January 1, 2026, mirrors the CTA but is only applicable to limited liability companies formed or authorized to do business in New York.  As with the CTA, any limited liability company that does not fall within one of the CTA’s 23 exemptions must report specific and personally identifiable information about the entity, and beneficial owners to New York Department of State. 

           

            Any new limited liability company formed after January 1, 2026 is required to file the report, or proof of exemption, within 30 days of formation or authorization to do business in New York.  Limited liability companies already in existence as of January 1, 2026, have until January 1, 2027 to file the initial report.  Once an initial report has been filed, all entities are required to file an annual statement either confirming or updating the information.

 

            Failure to comply with the reporting requirements of the NYLTA can result in a fine of up to $500 per day.

 

 

Cristin M. Keegan, Esq.