January 2024

New 2024 Federal Reporting Requirements for Limited Liability Companies, Corporations and Other Entities

The Corporate Transparency Act (“CTA”) requires certain business entities, such as limited liability companies (“LLCs”), corporations or other entities that are formed or registered to do business in a U.S. state (or under the laws of any American Indian tribe) (“Reporting Companies”), to:

1. Report certain beneficial ownership information (“BOI”) to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”);

2. Disclose information about who created or registered the entity to do business in the U.S.; and

3. Report changes to previously reported information within the specified time period.

Every owner of an LLC, corporation or other business entity must meet these new requirements as noncompliance can result in significant penalties.

The reported information is maintained by FinCEN in a secure nonpublic database. The CTA is intended to assist law enforcement in combatting money laundering, tax fraud, financing of terrorism, and other illegal activity through anonymous shell and front companies.

FinCEN issued regulations implementing the CTA’s reporting provisions and providing details on who must file a report, what information has to be reported and when reports must be filed. The regulations provide that the reporting requirements under the CTA take effect on January 1, 2024.

Certain entities are exempt from reporting under the CTA. These are larger, more highly regulated entities and other entities subject to different ownership reporting requirements.

Please note that in New York State the LLC Transparency Act (modeled on the CTA) was signed into law on December 23, 2023, which will create a database of the beneficial owners of LLCs that is accessible to government agencies and law enforcement. Unlike the CTA, the N.Y. LLC Transparency Act only applies to LLCs. The law is set to take effect upon approval of a “chapter amendment” by the New York Legislature. It is possible that other states will enact similar laws.

Core Takeaways

Reporting deadlines:

  • Entities created or registered before 2024 must file their initial reports by Jan. 1, 2025.
  • Entities created or registered on or after Jan. 1, 2024, must file within 90 days of creation or registration.
  • Entities created or registered on or after Jan. 1, 2025, must file within 30 days of creation or registration.

Who the new requirements apply to:

  • Privately held LLCs, corporations and other entities formed or registered to do business in any U.S. state (or with any American Indian tribe) for any purpose, including for estate, investment, real estate, tax, privacy or other personal planning are subject to the new requirements.
  • If an estate planning trust owns an interest in an entity qualifying as a reporting company, information about a trust’s beneficial owners (such as settlors, beneficiaries, and trustees) may be reportable.

Accessibility of reported information:

  • The beneficial ownership information will be reported to FinCEN. It will be accessible to authorized government entities but will not be part of any publicly accessible database.

State Laws:

  • New York State has enacted the LLC Transparency Act, modeled on the CTA. The NY LLC Transparency Act, however, only applies to LLCs.

For more information, read our FAQs on the CTA here.

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