Corporate Transparency Act – Initial Information

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Rödl & Partner Tax Matters Volume 2022-6, published December 14 , 2022


In 2021, Congress passed the Corporate Transparency Act requiring disclosure of the ultimate beneficial owners of U.S. and foreign corporations to FinCEN starting in 2024. Final Regulations were released on September 29, 2022. Below please find key takeaways from recently released regulations. We will provide more information as it becomes available but certain taxpayers should anticipate new compliance requirements in the future.

 

Reporting starts January 1, 2024. Companies created or registered prior to that date have one year to register and file their annual report. Companies created or registered after that date have to register and to file their initial report.

 

Reporting will be required for both U.S. and foreign entities (e.g., corporations, LLCs, partnerships) which are formed or registered to do business under the law of a state or Indian tribe. Trusts which do not register under state law should be excluded. FinCEN expects over 30 million filings in the initial year and 5 million a year thereafter.

 

Reporting entities must disclose information about beneficial owners, defined to include both individuals who own directly or indirectly 25% of the entity and individuals who exercise substantial control over the reporting entity (i.e., make important decisions on behalf of the entity, including senior officers).

 

Required disclosure for beneficial owners will include name, birth date, address and a unique identifying number with documentation including the image of such individual (e.g., passport, driver's license). FinCEN can then issue a FinCEN identifying number for future filings.

 

Changes in beneficial ownership must be reported within 30 days.

 

More regulations and guidance are expected in the next year, including limitations on who has access to the data. We will keep you updated as more information becomes available.

 

If you have questions, please contact your local Rödl & Partner representative. 


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