FinCEN's Corporate Transparency Act - FAQ
By: Sarah Gerardi
What is the Corporate Transparency Act?
Enacted by Congress in January of 2021, the purpose of the CTA is to protect US Financial Institutions from being used to launder money by illicit actors creating shell companies. This law states that all reporting companies must provide ownership and applicant information when doing business in the U.S. The ownership and applicant information are to be kept by FinCEN in a secure government database.
US law enforcement agencies will be allowed to access this database to investigate entities they suspect of illicit activities. Financial institutions & regulators, such as banks, may also have access to this database upon the company’s consent for customer due diligence requirements. (ex. Opening a bank account or obtaining a business loan)
What is a ‘Reporting Company’?
There are TWO types of reporting companies, domestic and foreign. A domestic reporting company is any corporation, LLC, or other entity created by filing a document with any Secretary of State or similar office. A foreign reporting company is a corporation, LLC or other entity created in a foreign country that is registered to do business in the US by filing a document with the Secretary of State or similar office.
(Final rule did not define the term ‘other entity’, will likely include limited liability partnerships, limited liability, limited partnerships, business trusts, and most limited partnerships.)
Exceptions to being a ‘Reporting Company’
There are 23 total exceptions to being considered a ‘Reporting Company.’ For brevity’s sake here is an overview of the exempt entities
Tax Exempt entities
Entities already heavily regulated through the SEC & other regulatory bodies for larger entities
‘Large Operating Companies’ Defined as: a company that employs more than 20 full-time employees in the United States and has an operating presence at a physical office in the United States. And that's filed a federal tax or information return for the previous year, showing it had more than $5 million dollars in gross receipts or sales.
Each reporting company to provide:
The full name of the reporting company
Any trade name or “doing business as” name of the reporting company
The business street address of the reporting company
The state or Tribal jurisdiction of formation of the reporting company (or for a foreign reporting company, the state or Tribal jurisdiction where such company first registers)
An IRS TIN of the reporting company (or, where a reporting company has not yet been issued a TIN, either a Dun & Bradstreet Data Universal Numbering System (DUNS) Number or a Legal Entity Identifier (LEI)).
Who is a ‘Beneficial Owner’ and what information do they need to report?
A beneficial owner is described as any individual who meets at least one of two criteria: (1) the individual exercises substantial control over the reporting company; or (2) the individual owns or controls at least 25 percent of the ownership interests of a reporting company.
Full legal name
Date of birth
Current residential address (per proposed rule)
Unique identifying number from an acceptable identification document
Valid drivers license number or unexpired passport number
In the case of foreign beneficial owners, a foreign passport is acceptable per 31 U.S.C. 5336(a)(1)
A scanned copy of the above referenced identification document
As a registered agent we would be considered the ‘Applicant’ in these filing scenarios. There are still changes and suggestions being made before the implementation in 2024, but as of now the ‘Applicant’ information is below.
A ‘Company Applicant’ would be the individual who files the document that creates the entity. In the case of a foreign reporting company, a ‘Company Applicant’ would be the individual who files the document that first registers the entity to do business in the United States. The proposed regulations specified that anyone who directs or controls the filing of an entity creation or registration document by another would also be a ‘Company Applicant’.
What information do ‘Applicants’ need to report?
Applicants need to report the exact same information as Beneficial Owners, except they can use their business address instead of their residential address.
Companies filed after the implementation date of January 1st, 2024, will have 30 days from the day they receive notice of their registration to file their FinCEN report.
Companies that are deemed reporting companies that were filed before the 2024 implementation date will have 1 year to file their FinCEN report.
If there are any inaccuracies in the report, or the reporting company needs to update the report due to any changes, they will also have 30 days to amend the report.
The attached link lists that reporting companies have 14 days to update any changes and file their initial report, however, this has been updated to 30 days per the DE Strategic Planning Conference and the Final Rule
Do I have to give my personal information to each client we deal with?
The short answer is no. FinCEN is creating a way to obtain a ‘FinCEN number’, applicants can submit their required information to FinCEN in advance and obtain this number to give to beneficial owners who need to file a report in lieu of giving out all of their personal information.
CA SOS New BizFile Launch - 04/07/2022
The California Secretary of State will be launching their newly enhanced BizFile system on April 7th . With the planned implementation there will be service interruptions for corporate filings, retrievals and UCC offerings.
Between March 23rd thru March 28th counter submissions will be held and processed after the March 29th launch in the order they were received. Documents will receive the file date based on the date received unless rejected. The 72-hour grace period for correcting rejected documents will NOT be reinstated.
The below services will be taken offline on the noted dates and will be made available on March 29th. During this time, there will be no evidence provided by the state so please anticipate delays in turnaround times.
E-Forms is now offline
Future File date/Future Effective Date is currently unavailable
Corp. Online Formations will be taken offline March 19th
LLC Online Formations will be taken offline March 19th
LLC Online Terminations will be taken offline March 23rd
Corp. Online SOI Filings will be taken offline March 23rd
LLC Online SOI Filings will be taken offline March 23rd
UCC Online Filings will be taken offline March 25th
Business Entity Searches will be taken offline March 25th (good standing certificates will not be available)
Certified Charter Document Requests will be held until after the launch.
If you have filings that are not time sensitive, the CA SOS has recommended waiting until the new BizFile Launch on or after March 29th, 2022.
With the new launch, expedite services will return however we are closely monitoring with the state on potential technical issues and will provide additional information as it becomes available. As with any new systems implementation, possible interruption in services may extend beyond the launch date and impact turnaround times.
Wyoming Secretary of State Fee Increases
effective July1st, 2021
Wyoming Secretary of State has increased filing fees of certain business entity documents which will take effect July 1st, 2021. Please click on this link to view the new schedule of fees.
July State Closures
July 1, 2021
Monday, July 5th - ALL STATES and Federal Government Offices
Friday, July 23rd - Utah
Nevada Secretary of State Changes
September 30, 2019
The NV Secretary of State continues to deal with delays and backlog due to the new business services system that was recently implemented. As a result of the volume of filings waiting to be processed, the state has temporarily eliminated the 24 hour expedite service option for all Corporate and UCC requests.
1-hour and 2-hour expedite options are still available but turnaround times are exceeding the 1 or 2 hour service. Evidence can be expected to be returned between same day to 24 hours when using these options, however the state reserves the right to extend these turnaround times in order to accommodate the volume and ongoing system issues.
Federal Tax Lien searches must be submitted over-the-counter currently as those records are maintained on a separate index from the UCCs and not available on the state's Silverflume portal. Over-the-counter requests are subject to the current 6-8 week turnaround time and only 1 or 2-hour expedite options are available as noted above.
NV SOS Business Services Outage
July 12, 2019
NV SOS Business Services Outage
Secretary of State Barbara Cegavske has issued an alert to those conducting business in Nevada that the Secretary of State’s commercial filing services will be unavailable starting the afternoon of Friday, July 12, 2019 in advance of the deployment of a new business processing system which is expected to launch on or before Thursday, July 18, 2019.
The following services will be unavailable during this transition period: All new entity filings, initial and annual list filings, amendments, state business license applications, copies requests, Uniform Commercial Code (UCC) filings, amendments and search requests, Notary Public applications, renewals and search services.
Current pending orders on routine service will be delayed and can take up to a month before copies or filing evidence comes back. To guarantee receipt of evidence by today, the state offers 1-hour expedite service for $1000, and 2-hour expedite for $500 additional state fee.
The implementation of the new filing system will begin at 4pm PST today and all business services will be suspended until launch of the new system on July 18th, 2019.
LLC/LP/GP Notification of Upcoming Delaware Taxes Due
March 29, 2019
Every domestic or foreign limited partnership, every domestic or foreign limited liability company, and every domestic or foreign general partnership shall pay an annual tax in the amount of $300.00 due on or before June 1 each year pursuant to Title 6 of the Delaware Code. Payments are considered timely if received (not postmarked) by June 1 (regardless of whether this date falls on the weekend.)
Please note that payments can be made online via the Delaware Secretary of State’s website www.corp.delaware.gov with your entity’s Delaware file number.
Delaware Annual Reports Due 03/01/19 for Corporations
February 28, 2019
Delaware annual report filings and franchise tax payments are due on or before March 1st, 2019 for corporations. The state's website will be available until 11:45pm EST on March 1st for online filings. Online filings can be submitted at: https://icis.corp.delaware.gov/Ecorp/LoginTax.aspx?FilingType=FranchiseTax#
The above deadline does NOT apply to LLCs, LPs, or GPs - these entity types have a later deadline of June 1st, 2019.
Failure to file by the deadline will result in a state penalty of $200 and a 1.5% monthly interest for the unpaid tax balance.
Emergency State Closure
February 20, 2019
Due to the inclement weather, the State of Delaware, Division of Corporations office will be closing at 1:30pm EST today Wednesday, February 20, 2019.
Please note that Corporate and UCC filings will NOT be processed during the closure, however, we can continue to request and obtain Corporate and UCC filing copies.
An extraordinary event will be logged in the system which will permit file dates on the day the State is closed in accordance with 8 DEL.C.§103(I)(1) and related sections under 6 DEL.C. During the unexpected closure, the emergency filing procedures will be activated. If you need today’s file date on a filing, we can submit tomorrow and request today’s date.
Telos Legal Corp. offices will remain open with business as usual. Please feel free to contact us if you have additional questions about the state closure today.