By Jared T. Coldiron


Norton Hammersley Business & Corporate Law

By Jared T. Coldiron

On January 1, 2024, a new federal law, the Corporate Transparency Act (“Act”), went into effect that will impact most closely held business entities, including corporations, limited liability companies, and limited liability partnerships, among other entities (“Reporting Company”).

The Act, which was introduced to improve money laundering enforcement, is designed to create a national database of individuals who either directly or indirectly (1) own a substantial interest in or (2) hold substantial control over a Reporting Company (the “Beneficial Owners”). The Financial Crimes Enforcement Network of the United States Department of Treasury (“FinCEN”) will maintain such database, which will not be public record, but will be available to various government agencies.

Unless a Reporting Company meets one of the specific exemptions under the Act, the entity must provide detailed information to FinCEN in a formal report that is filed on the website. The Reporting Company must provide general entity information, as well as personal specifics and documents for each individual Beneficial Owner, including his or her name, address, and date of birth. Additionally, each Beneficial Owner must provide a unique identifying number, such as a driver’s license or passport number, and an image of such document.

The exemptions to filing under the Act include, among others, large business entities, tax-exempt organizations, and inactive entities. A large business entity under the Act is one that (1) has an operating presence at a physical office in the United States, (2) employs 20 or more full-time employees, and (3) filed a federal income tax return for the prior year demonstrating gross receipts in excess of $5 million. The majority of other exemptions are entities that are already subject to significant regulation by federal government agencies such as banks, investment firms and insurance companies.

If a Reporting Company is required to file a FinCEN report, a detailed review and analysis of the Act should be performed to determine which individual or individuals are deemed Beneficial Owners. Generally, if an individual owns or controls, either directly or indirectly, twenty-five (25%) percent or more of the Reporting Company’s total ownership interest, then the individual is deemed a substantial owner and included in the report. A Reporting Company may have multiple types of ownership interests, including equity, stock, voting rights, options and any other instrument, contract, or mechanism used to establish ownership.

The Act also considers Beneficial Owners to be those individuals who exercise substantial control over the Reporting Company. This includes those who have direct control, such as an individual in a senior officer role (i.e. president, chief operating officer, general counsel or other similar title or duty), as well as indirect control, such as an individual who may possess authority and influence over important entity decisions.

For Reporting Companies in existence prior to January 1, 2024, the initial report is due to FinCEN by January 1, 2025. However, any new Reporting Company formed in 2024 has only ninety (90) days from formation to file. There is no charge to file the report, however, a failure to do so may result in substantial civil penalties, as well as potential criminal penalties, including imprisonment. Once the initial FinCEN report is filed, if there are any necessary changes, an updated report must be submitted within thirty (30) days of the change.

The Act is currently undergoing legal challenges, however as of the date of publication, the Act remains in effect for all entities who have not received a specific court ruling stating otherwise. Therefore, Reporting Companies should continue to consider their reporting obligations and deadlines.

This article does not create an attorney-client relationship and is intended to be informational and does not constitute legal advice regarding any specific situation. If you would like our firm to assist you with filing, please contact us at 941-954-4691 or by email at