CTA Resources

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?