CTA Compliance

CTA Compliance; Thompson Law Group; Corporate Transparency Act; FinCEN

The Corporate Transparency Act (CTA) went into effect on January 1, 2024, but DO NOT PANIC.

If you are an existing company, you do not need to file your company report with FinCEN until December 31, 2024.

However, you should not delay as time can slip away fast. Unless you are expecting changes to your company structure before the end of 2024, you should file your Beneficial Ownership Information (BOI) report now.

Reporting to FinCEN

Here is the very, very super general rule about reporting to FinCEN: If your company is an LLC, corporation or some type of limited partnership (LP) and it has less than 20 full-time employees, it must report to FinCEN. If your company has 20 full-time employees and gross receipts of $5 million or more annually, it is exempt from reporting to FinCEN (large company exemption). Keep in mind that if either the number of full-time employees decreases to below 20 or the gross receipts are less than $5 million, the large company must report to FinCEN within 30 calendar days of the change. This is why it is IMPERATIVE to have a rigorous CTA compliance program in place so that any changes are identified within the timeframe of reporting them.

Reporting Companies must report their basic information to FinCEN (name, EIN, physical location, etc.). The company must also report the personal information (name, residential address, date of birth and a copy of a passport/driver's license) of its owners with at least 25% of ownership, managers, officers or anyone with substantial control of the business.

A Note on Personal Information

Many people are worried about providing their personal information to FinCEN. This is silly. All of the information that is required to be provided is already available to the government. Reporting to FinCEN is annoying and it is one more thing to keep track of as a business owner, but it is not giving out information that the government does not already have. BOI reports are ONLY available to law enforcement agencies that in most instances, have a Court Order allowing access to the information. The public has no access to BOI reports so you can still maintain your owners' anonymity.

The CTA is serious.

Unlike many laws that do not have penalties for failing to follow them, the CTA has teeth. Failure to file a BOI report by the deadline may result in fines of $500/day up to $10,000 and possible jail time. The OWNERS of the reporting company are PERSONALLY RESPONSIBLE for reporting to FinCEN. The owners of the reporting company will be the ones fined or in extreme cases jailed. This is NOT the time for company owners to put their heads in the sand and delegate this reporting to staff (unless there is a compliance program in place and even then, owners still need to monitor it).

If you own a business, this is just one more thing you are required to do. It is like obtaining and maintaining a business license or filing an annual report if you are required to do so. It is a cost of doing business. If you hire us to handle your BOI report filing or implement a compliance program, be sure to provide your receipt for payment to your tax preparer so that you may maximize your tax deductions.

Bad News / Good News!

The bad news is you probably have to file a BOI report with FinCEN. The good news is we can help. The bad news is you still have to be involved. The good news is we will remind you of any deadlines. The good news is this is NOT an annual requirement. The bad news is that any changes in your BOI report must be reported to FinCEN within 30 calendar days of the change.

The really good news is this is an opportunity to make sure your business records are up to date and that your business is legally sound. The even better news is we can help you. You don't have to learn new law, you don't have to become an expert, we will answer any questions and guide you through the process.

DEADLINES UNDER THE CTA: What you need to know

ANY COMPANY IN EXISTENCE PRIOR TO JANUARY 1, 2024

Any non-exempt company in existence prior to January 1, 2024 has until December 31, 2024 to file its initial BOI report with FinCEN. Unless changes need to be made or things will change before the end of 2024, companies should file their BOI reports as soon as possible.

NEW COMPANIES CREATED AFTER JANUARY 1, 2024

Any new company created after January 1, 2024 has 90 calendar days to file its initial BOI report with FinCEN. The 90 calendar days start to run at the time the company receives notice that the company’s creation or registration is effective. The reporting company must also report the personal information of its Company Applicants (the person who directed the company formation as well as the person who actually filed the formation paperwork).

ANY CHANGES MADE BY THE REPORTING COMPANY AT ANY TIME AFTER FILING THE INITIAL BOI REPORT

If anything changes on the BOI report after it has been filed, the reporting company has 30 calendar days to update the report. Changes include: any address changes of the company or the beneficial owners; or any removal or addition of beneficial owners (including officers, managers, directors or others with substantial control).

FOREIGN COMPANIES REGISTERING TO DO BUSINESS IN THE U.S AFTER JANUARY 1, 2024

Any foreign company registering to do business in the U.S, after January 1, 2024 has 90 calendar days to file its initial BOI report with FinCEN. The 90 calendar days start to run at the time the company receives notice that the company’s registration is effective. The reporting company must also report the personal information of its Company Applicants (the person who directed the foreign company registration as well as the person who actually registered the company).

NEW COMPANIES CREATED AFTER JANUARY 1, 2025

Any new company created after January 1, 2025 has 30 calendar days to file its initial BOI report with FinCEN. The 30 calendar days start to run at the time the company receives notice that the company’s creation or registration is effective.

FOREIGN COMPANIES REGISTERING TO DO BUSINESS IN THE U.S AFTER JANUARY 1, 2024

Any foreign company registering to do business in the U.S, after January 1, 2025 has 30 calendar days to file its initial BOI report with FinCEN. The 30 calendar days start to run at the time the company receives notice that the company’s registration is effective.

COUNTING THE DAYS TO DEADLINE

FinCEN uses calendar days so a deadline fall on a weekend or a holiday. Given filing with the CTA is all electronic, a BOI report or update may be due and must be filed on a weekend or a holiday.

Before you file your initial BOI report with FinCEN, clean your house.

As a business owner (especially a small business owner), general business housekeeping can fall by the wayside as you are busy running the business (as you should be). However, given the tight deadlines for making changes to your BOI report, it would be best to make any changes in your company before you file your initial BOI report. You should also make sure that the records at the Corporation Commission and/or the Secretary of State are accurate and up to date so your reporting to FinCEN matches other public records. We are happy to do an analysis of public records and make any changes you need if you do not want to do so. The important thing is it needs to be done.

This is also a great opportunity to update your Operating Agreement, Partnership Agreement or Bylaws. (link to agreements package?). If you do not have any of these, it is time you do. It is also important to implement a CTA Compliance policy so you have active reminders and procedures to maintain accurate records with the CTA. A compliance policy may be very simple or complex depending on the size and structure of your business. WE can help tailor a compliance program to suit your needs. (link to compliance procedure package?).

SCAM ALERT!

FinCEN is NOT going to contact you unsolicited.

Company owners are responsible for filing with FinCEN. DO NOT respond to any emails that you have not requested. Scammers are out there and they are using business owners ignorance to get their personal information.

BE vigilant and STAY educated.

CTA BOI REPORT FILING PACKAGES

Tier 1: Reporting company with one beneficial owner

You are Tier 1 if you own your company as an individual and you are also the only manager, officer or director. No other person or company, but you, has any control or ownership of the company. You are also Tier 1 if you own your company as a single person revocable living trust.

Bronze – $475
  • Analysis of Beneficial Owners
  • Attorney review of BOI Report prior to filing
  • Filing of BOI Report with FinCEN
  • Unlimited changes to the BOI Report in 2024
  • Additional companies with exact same info: $350
  • Any changes to the BOI Report after 2024: $450
Silver – $775
  • Analysis of Beneficial Owners
  • Review and Analysis of Public Company Records for accuracy and necessary changes (prior to filing BOI Report)
  • Attorney review of BOI Report prior to filing
  • Filing of BOI report with FinCEN
  • Unlimited changes to the BOI Report in 2024
  • Additional companies with exact same info: $475
  • Any changes to the BOI Report after 2024: $450
Gold – $1,225
  • Analysis of Beneficial Owners
  • Review and Analysis of Public Company Records (prior to filing BOI Report)
  • Company Checkup and Succession Planning Consult – 60-minute consult with Attorney (prior to filing BOI report with CTA)
  • Attorney review of BOI Report prior to filing
  • Filing of BOI report with FinCEN
  • Unlimited changes to the BOI Report in 2024
  • Compliance Document Bundle (CTA Compliance Policy and Basic Operating Agreement with CTA Compliance Clause)
  • Additional companies with exact same info: $475
    (does not include additional attorney consult)
  • Any changes to the BOI Report after 2024: $450

Tier 2: Reporting company with two beneficial owners

You are Tier 2 if you and your spouse or you and another company or individual own your company and only the two of you are the managers, officers or directors. No other person or entity, but the two of you, has any control or ownership of the company. You are also Tier 2 if you own your company as a single or a two-person revocable living trust. If your company is owned by another company, then that company must also file a BOI report and should sign up for Tier 1, Tier 2 or Tier 3 as appropriate.

Bronze – $575
  • Analysis of Beneficial Owners
  • Attorney review of BOI Report prior to filing
  • Filing of BOI Report with FinCEN
  • Unlimited changes to the BOI Report in 2024
  • Additional companies with exact same info: $450
  • Any changes to the BOI Report after 2024: $450
Silver – $875
  • Analysis of Beneficial Owners
  • Review and Analysis of Public Company Records for accuracy and necessary changes (prior to filing BOI Report)
  • Attorney review of BOI Report prior to filing
  • Filing of BOI Report with FinCEN
  • Unlimited changes to the BOI Report in 2024
  • Additional companies with exact same info: $450
  • Any changes to the BOI Report after 2024: $450
Gold – $1,425
  • Analysis of Beneficial Owners
  • Review and Analysis of Public Company Records (prior to filing BOI report with CTA)
  • Company Checkup and Succession Planning Consult – 60 minute consult with Attorney (prior to filing BOI Report with CTA)
  • Attorney review of BOI Report prior to filing
  • Filing of BOI Report with FinCEN
  • Compliance Document Bundle (CTA Compliance Policy and Basic Operating Agreement with CTA Compliance Clause)
  • Unlimited changes to the BOI Report in 2024
  • Additional companies with exact same info: $450
    (does not include additional attorney consult)
  • Any changes to the BOI Report after 2024: $250

Tier 3: Companies with more than two individual beneficial owners

You are Tier 3 if two or more individuals or companies own or control the company. If your company is owned by another company, then that company must also file a BOI report and should sign up for Tier 1 or Tier 2 as appropriate.

Bronze – $775
  • Analysis of Beneficial Owners
  • Attorney review of BOI Report prior to filing
  • Filing of BOI Report with FinCEN
  • Unlimited changes to the BOI Report in 2024
  • Additional companies with exact same info: $550
  • Any changes to the BOI report after 2024: $550
Silver – $1,025
  • Analysis of Beneficial Owners
  • Review and Analysis of Public Company Records for accuracy and necessary changes for the reporting company only (prior to filing BOI Report)
  • Attorney review of BOI Report prior to filing
  • Filing of BOI Report with FinCEN
  • Unlimited changes to the BOI Report in 2024
  • Additional companies with exact same info: $550
  • Any changes to the BOI Report after 2024: $550
Gold – $1,625
  • Analysis of Beneficial Owners
  • Review and Analysis of Public Company Records for the reporting company only (prior to filing BOI Report with FinCEN)
  • Company Checkup and Succession Planning Consult – 60-minute consult with Attorney (prior to filing BOI report with FinCEN)
  • Attorney review of BOI Report prior to filing
  • Filing of BOI Report with FinCEN
  • Compliance Document Bundle (CTA Compliance Policy and Basic Operating Agreement with CTA Compliance Clause)
  • Unlimited changes to the BOI Report in 2024
  • Any changes to the BOI Report after 2024: $550
  • Additional companies with exact same info: $550
    (does not include additional attorney consult)

Unsure which Tier you fall in? We can help.

CTA Reporting Analysis – 60-minute attorney consult – $475

Are you not sure if your company needs to report to FinCEN under the CTA. Do you think your company may be exempt? Do you just want to discuss your particular company and its beneficial owners? Schedule a CTA Reporting Analysis and we will figure out your company’s status under the CTA.

If your company is required to file a BOI Report with FinCEN after this consult, a $100 discount will be applied to any BOI Report filing package you choose.

All consults are by telephone or Zoom (your choice).

Additional Attorney consult on CTA

If you have purchased a BOI Report Fiiling Package, but want some additional help understanding the CTA as it relates to your specific company or want to discuss your business structure, a succession plan or any other business law questions, please email us and we will schedule a 30-minute or 60-minute consult.

All consults are by telephone or Zoom (your choice).

  • 30 minutes – $275
  • 60 minutes – $375

Other Business Service Packages

Company Checkup and Succession Planning Consult – 60 – 90 minutes Attorney time

Let’s make sure your company documents are up to date with any changes in the law as well as with any changes to your company. We will review any internal document you have (Operating Agreement, Bylaws, Partnership Agreement, your formation documents, etc.) to be sure they contain all of the provisions necessary to run, shut down, change and transition your business. If you do not have governing documents, we will discuss creating them. In addition, we will discuss having a business succession plan so that if something happens to you or one of the other owners, temporarily or permanently, your documents have a detailed plan to follow.

(some attorney time may be spent reviewing company documents prior to the consult)

  • Cost: $475

Arizona LLC Formation – single member

Package includes consult with attorney about business/LLC basics, formation of the LLC, and a basic Operating Agreement.

  • Cost: $1,525
  • (includes ACC filing and $35 expedite fees and Tier 1 Gold – CTA filing package)

Arizona LLC Formation – two members

Package includes consult with attorney about business/LLC basics, formation of the LLC, and a basic Operating Agreement. An upgrade to a more comprehensive Operating Agreement may be an additional charge and will be discussed at the initial consult.

  • Cost: $1,725
  • (includes ACC filing and $35 expedite fees and Tier 2 Gold – CTA filing package)

Arizona LLC Formation – two or more members

Package includes: consult with attorney about business/LLC basics; formation of the LLC; and a basic Operating Agreement. An upgrade to a more comprehensive Operating Agreement may be an additional charge and will be discussed at the initial consult.

  • Cost: $1,925
  • (includes ACC filing and $35 expedite fees and Tier 3 Gold – CTA filing package)

Arizona LLCs – Amendments to Articles of Organization

You must file Articles of Amendment to change members (owners), managers, their addresses, management structure or any other change to the original Articles of Amendment.

  • Cost: $850
  • (includes ACC filing and $35 expedite fees)

Operating Agreements

Draft a comprehensive Operating Agreement.

Draft a comprehensive Operating Agreement. If you already have an Operating Agreement, we will incorporate your existing terms in the new Operating Agreement. This option includes up to 2 hours of consultation and correspondence to tailor the agreement’s provisions to your company’s needs. All new/updated Operating Agreements will include a CTA Compliance Policy and succession plan. Prices vary based on complexity of business.

Partnership Agreements

Draft a comprehensive Partnership Agreement.

If you already have an Partnership Agreement, we will incorporate your existing terms in the new Partnership Agreement. This option includes up to 2 hours of consultation and correspondence to tailor the agreement’s provisions to your partnership’s needs. All new/updated Partnership Agreements will include a CTA Compliance Policy and succession plan. Prices vary based on complexity of business.

Corporate Bylaws/Meeting Minutes/Corporate Resolutions review

Corporations are required to have Bylaws and annual meetings. We will review your corporate records and help you ensure that your corporation is in compliance with Arizona law. We will also discuss an appropriate CTA Compliance policy. If appropriate, we may also discuss conversion of the corporation to an LLC.

  • Cost: $475

Contract Review

It is important to review your company’s contract periodically as laws change and so does your business. This consult will include a review of any contracts you submit that are yours or you received.

  • Cost: $475
  • (Up to 25 pages and consult with Attorney – 90 minutes of attorney time total)

CTA Compliance Documents

Fillable pdf CTA Compliance Policy and Operating Agreement/Bylaw/Partnership CTA Compliance clause.

  • Cost: $375

CTA Compliance Policy and Training

It is imperative that companies maintain CTA Compliance which means having a policy and procedures in place to ensure that no one forgets to make changes with FinCEN within 30 days of their occurrence. Company owners are personally liable for CTA Compliance and failure to keep BOI reports updated may result in $500/day fine as well as jail time. Companies with multiple business owners need a robust CTA Compliance Policy as well as procedures for following it. In addition, if company staff are going to enforce it, they need training. This package includes all of the CTA Compliance documents, a 60-minute consult with owners to tailor a policy for the company as well as an hour training for staff.

  • Cost: $2,500

FAQS

The Corporate Transparency Act is a federal law passed by 2/3 of Congress on January 1, 2021. It is designed to enhance transparency in business ownership to combat money laundering, terrorism and other illicit activities by having businesses report their ownership information to FinCEN in a Beneficial Ownership Information (BOI) report.

The Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Department of Treasury (similar to the IRS). The mission of FinCEN is to safeguard the financial system from illicit use, combat money laundering and terrorism and to promote national security through strategic use of financial authorities and the collection, analysis and dissemination of financial intelligence.

The Beneficial Ownership Interest (BOI) report is the document that provides the reporting company’s information to FinCEN. They may only be filed online on FinCEN’s Beneficial Ownership Secure System (BOSS) platform. Third companies like us can file the report and store your information confidentially for you.

Any company that was created by filing or registering a document with the Secretary of State or Corporation Commission in the U.S is called a “reporting company” and must file a BOI report to FinCEN unless it is exempt. Filing and registration requirements for businesses may vary by state so in some states like Delaware, a general partnership would be a reporting company whereas in Arizona it would not. Entities created through and Indian tribe are also reporting companies. Foreign companies that have registered to do business in the U.S. must also report to FinCEN and are called “foreign reporting companies”. Your company may be a reporting company, but it also may be exempt from reporting to FinCEN.

There are 23 exemptions to the reporting requirements of the CTA. A company may be a reporting company, but it may not have to report because it is exempt. The 3 most common exemptions for small businesses are the: large operating company exemption; tax-exempt entity exemption and the inactive entity exemption.

Any reporting company that has 20 full-time employees (not hybrids, not independent contractors, but full-time employees), regularly conducts business at a physical location in the U.S. and has annual gross receipts of $5 million or more is exempt from filing a BOI report with FinCEN. However, if any of these things change, the company has 30 calendar days to report the change to FinCEN. If a foreign reporting company is seeking to use this exemption, there are additional requirements to consider. Please seek specific legal advice to ensure proper use of this exemption.

Generally, tax-exempt entities that are described under 501(c) of the Internal Revenue Code of 1986 (Code) and exempt from tax under 501(a) of the Code are exempt from reporting under the tax-exempt entity exemption of the CTA. In some instances, an entity assisting a tax-exempt entity may also be exempt from reporting to FinCEN. Please seek specific legal advice if you believe that you may not have to report under the entity assisting a tax-exempt entity exemption to be sure you qualify.

If a business was formed prior to January 1, 2020 and is not currently engaged in business, has had no change in ownership or received funds in an amount greater than $1,000 in the last 12 months, is not owned by a foreign person and holds/owns no foreign assets, it qualifies for the inactive entity exemption and does not need to file a BOI report with FinCEN. If you are an owner of an inactive company and are never going to use it again, the best practice would be to actively terminate it with the Secretary of State or Corporation Commission where it was formed. Any company that is terminated by the end of December 31, 2025 has no obligation to report to FinCEN.

No, you do not need to hire a lawyer to file your BOI report with FinCEN. However, an attorney can guide you in the interpretation of the law and ensure that you are providing an accurate report. Plus, most lawyers carry malpractice insurance so you have a remedy if there is an inadvertent mistake. If you file on your own, you are on your own.

There is nothing that says a CPA (or other authorized individual) cannot file a BOI report for a client, but you do not have lawyers file your taxes so having a CPA file your report may be having them give you legal advice. It is always best practice to have both a CPA/tax professional on your business team. The CPA/tax professional should only give you tax advice and the attorney should advise you on business law (which includes the CTA).

No, statutory agents and registered agents have no ownership interest in or control of a company by virtue of being its agent for receiving legal documentation (service of process). Unless the statutory agent or registered agent has 25% or more ownership in or another role in the company that gives the agent substantial control of the company, they are not reported to FinCEN on the BOI report.

If your company is more than 25% owned by a trust, then anyone who substantially controls the trust will need to report their personal information on the BOI report. This may include the grantor(s), trustee(s) and in some instances the beneficiaries. If the trust is created by filing documents with a Secretary of State or other agency, then the trust will have to report as a reporting company as well. In most states, like Arizona, trusts are only private contracts and are not required to report to FinCEN as a reporting company. Please seek legal advice to ensure proper reporting of a trust as the reporting requirements are fact specific.

If your company is more than 25% owned by another company, then the other company will need to report to FinCEN as well unless it is exempt. The CTA is designed to have each company report until such time as a human owner is identified. Please seek legal advice to ensure proper reporting as the reporting requirements are fact specific.

Yes. Information provided to FinCEN is solely for law enforcement purposes. It is not public and law enforcement may only have access to it, in most cases, by Court Order. What information is my company reporting to FinCEN?

The reporting company files the BOI report. The reporting company is required to provide its name (including any fictitious names it uses), address and EIN. The reporting company is also required to provide the personal identifying information of any owner that has a 25% ownership interest or more or any person that has substantial control over company affairs (generally, managers, officers, directors, CEOs, CFOs, etc.).

The reporting company must collect and report the name, date of birth, residential address and submit a copy of the beneficial owner’s non-expired driver’s license or non-expired passport. If the beneficial owner is another company, then that company may need to file its own BOI report.

We collect your beneficial owner’s personal information from them directly so you don’t have to. No beneficial owner will have access to any other beneficial owners personal identifying information using our service.

You may request a FinCEN Identifier from FinCEN which only requires you to provide your personal information to FinCEN directly. Instead, you would provide the reporting company your FinCEN Identifier number in lieu of your personal information. The downside to a FinCEN Identifier is that there is no way to cancel its registration at this time. This means that if you have a FinCEN Identifier, you will have to keep it updated forever or you will be fined. Alternatively, you can suggest that your reporting company use our service for its CTA compliance needs as we keep all beneficial owner’s personal information confidential from each other.

The reporting company is responsible for collecting beneficial ownership information of its beneficial owners (which includes those with substantial control) and filing the report with FinCEN. However, the beneficial owners are PERSONALLY LIABLE for failure to file the initial report or failure to update that report within 30 calendar days of any change to the initial filing.

Probably not. It is rare that a state requires that a sole proprietor register to with the Secretary of State or Corporation Commission to exist or do business.

Having a business license, EIN or a trade name does not create a sole proprietorship so having a business license, EIN or registering for a trade name do not trigger reporting under FinCEN by themselves.

Taxation of a company is not part of the analysis of reporting to FinCEN. If you are a reporting company, you must report to FinCEN unless you are exempt.

NO. This is not an annual registration. However, any time one of your beneficial owners changes addresses or renews a passport/driver’s license the reporting company has 30 calendar days to report that change to FinCEN. If the company changes its address or any of the information it has provided to FinCEN, those changes must be reported to FinCEN within 30 calendar days.

A Company Applicant is the individual who directly files the document to create or register the company with the Secretary of State or Corporation Commission; or the person who is primarily responsible for directing or controlling the filing. For example, if a lawyer advises a client to form an LLC and then the lawyer’s paralegal forms the LLC. Both the lawyer and the paralegal are company applicants. This means that both the lawyer and the paralegal will have to provide their personal identifying information to the reporting company they created so it may file its BOI report or they will need to get a FinCEN identifier to use so they do not have to provide their personal information to a client. Company applicants include ANYONE (like you or your CPA) who files the paperwork to form a business entity (like an LLC). If you form your company yourself, you will need to report yourself as a company applicant as well as a beneficial owner. Only entities formed after January 1, 2024 have to report their Company Applicant(s).

There are no safe harbors in the CTA. Non-exempt reporting companies must report by December 31, 2024. New reporting companies must report within 90 calendar days and if ANY changes are made to the information provided to FinCEN those changes must be reported within 30 calendar days. Beneficial owners are personally liable for the reporting of their information to FinCEN. This is no time for owners to delegate to untrained staff. It is perfectly appropriate to task company personnel with monitoring CTA Compliance, but they need to be trained and there needs to be clear procedures in place detailing the company’s commitment to compliance. If the company makes a reporting mistake, it may help that it maintained a CTA Compliance Policy and training program. Alternatively, hopefully, having a CTA Compliance Policy and training program will avoid the imposition of any fines against the beneficial owners for failure to report.

The information provided in this website is meant only as a general description of the current laws as of the date of the writing. It is not meant to be an exhaustive discussion of all the nuances of the law and is intended to be only an overview. Many issues may appear simpler than they are, and an individual should always contact an attorney to obtain a complete, accurate interpretation of the law given the individual's particular circumstances. Thompson Law Group, P.C. makes no representations as to how the law would affect a particular situation and intends only to illustrate areas of concern and give general information.