Federal Corporate Transparency Act Reporting is Now Required

February 28, 2025 by Edward McMurray

The Corporate Transparency Act requires that businesses and closely held entities must file a report with the U.S. Department of the Treasury Financial Crimes Enforcement Network (FinCEN). This law affects primarily small businesses by requiring them to identify the company’s  beneficial ownership, or those that have substantial control over the organization.

The Corporate Transparency Act has been mired in lawsuits since its inception and enforcement was even suspended due to an injunction. However, on February 17, 2025, the United States District Court for Eastern District of Texas stayed the injunction. Reporting is again required and FinCEN can enforce the penalty provisions of the CTA.

FinCEN has released new rules on reporting deadlines for these companies to file their Beneficial Ownership Information Report (BOI).

1. Entities created before January 1, 2024, must file their report by March 21, 2025.
2. Entities created between January 1, 2024, and December 31, 2024, must file their report by the later of 90 days since the date of formation or March 21, 2025.
3. Entities created between January 1, 2025, and February 21, 2025, must file their report by March 21, 2025.
4. Entities created on or after February 21, 2025, must file their report within 30 days of the date of their formation.
5. Entities who were originally required to report who later become exempt, must file an “Exempt from Reporting” report with FinCEN within 30 days of becoming exempt.
6. Entities who were originally exempt and who later are required to report, must file an initial report with FinCEN within 30 days of becoming a reporting company.

Not Every Business Needs to Report

The Corporate Transparency Act reporting primarily affects small businesses and not large companies or certain other exempt entities. The following are the types of entities that must report:

1. Entities that are formed in the United States or registered to do business in the United States
2. Entities that are a corporation or limited liability company (LLC)
3. Entities that have 20 or less full-time employees and $5 million or less in annual revenue for the prior year

Businesses that are regulated by either a state or federal agency are exempt from reporting. These entities include:

• Financial institutions
• Publicly traded companies and other entities that report under the Securities and Exchange Act
• Insurance Companies or state-licensed insurance producer
• Accounting firms
• Tax exempt entities with 501(c)3, 501(c)4, or 501(c)6 IRS tax-exempt status
• Domestic governmental authorities
• Certain securities brokerage firms

What to Report to FinCEN

Reporting companies must file certain information on the company and those who hold beneficial ownership in the company. The  report must include:

1. Full legal name of the entity
2. List of any trade names or DBAs
3. The current address of the principal place of business or, if a foreign entity, the address of the primary location where the reporting company does business
4. The state, tribal, or foreign jurisdiction of formation, and, if foreign, the state or tribal jurisdiction where the reporting company first registered in the US
5. The IRS taxpayer identification number (TIN) of the reporting company, or, if a foreign entity does not have a TIN, a tax identification number issued by the foreign jurisdiction and the name of the jurisdiction.

In addition to reporting company information, reporting companies must identify every person with beneficial ownership of the company. A beneficial owner under the CTA is an individual who, either directly or indirectly, owns 25% or more of a reporting company. A beneficial owner is also an individual that has or can direct substantial control over the reporting company. This can include managers of LLCs, officers, directors, and certain key employees. The BOI must include the following:

1. Full legal name
2. Date of birth
3. Current and complete residential street address
4. A unique identifier number and the issuing jurisdiction from one of the following documents
   1. Non-expired US Passport
   1. Non-expired state, local government, or tribal identification card
   1. Non-expired state driver’s license
   1. Non-expired passport issued by a foreign government, only if the individual has none of the other permissible documents.
5. Image of the document showing the unique identifier number

If an individual provides the foregoing information to FinCEN directly, the individual may obtain a FinCEN Identifier, which can then be provided to FinCEN in a beneficial ownership report in lieu of the required information about the individual.

Companies must also update their reports if information changes, and the updates must be filed through FinCEN no later than 30 days after the change. Providing or attempting to provide false beneficial ownership information, or failing to report or complete beneficial ownership information, can lead to a civil penalty of up to $500 per day, with a maximum fine of $10,000 or up to a 2-year prison sentence.

While reporting is again required, the lawsuits against the Corporate Transparency Act remain. Levin Ginsburg is closely watching all the developments regarding the lawsuits and will provide updates as they arise.

Edward McMurray represents clients in Levin Ginsburg’s Corporate Law Practice and has extensive experience with the Corporate Transparency Act. If you have any questions about the Corporate Transparency Act please contact Edd through our website.

Levin Ginsburg is a full-service law firm that prides itself on being counselors for all types of businesses and individuals. Regardless of your need, our attorneys exercise great care in being thorough, organized, and efficient in serving clients.