The Ins and Outs to Be Aware of with the Corporate Transparency Act

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Are you familiar with the Corporate Transparency Act? Did you know that the Corporate Transparency Act (CTA) went into effect on January 1, 2024? What is this Act? This Act represents a significant shift in the way reporting companies in the United States must disclose their beneficial ownership information. Florida elder law attorneys, who are members of  The Academy of Florida Elder Law Attorneys (AFELA), know how crucial it is to both understand the implications of this Act and share this with clients, especially in the context of business succession, mergers, acquisitions, and the administration of estates.

To begin, it is important to understand that the CTA aims to curb illegal activities like money laundering, tax evasion, and financing of terrorism by enhancing transparency in the ownership of legal entities. It mandates the disclosure of beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN).

You need to know that there are key compliance dates to be aware of and understand including, but not limited to, the following:

  • Existing Entities. For reporting companies in existence as of the effective date, January 1, 2024, the initial reporting deadline is within one year.
  • New Entities. Companies created or registered after the effective date must file their initial reports within 30 days of their creation or registration. 
  • Notably, FinCEN has proposed extending this initial filing deadline to 90 days for entities established in 2024.

So, what exactly will need to be reported? Right now the CTA requires the following information for each beneficial owner and company applicant:

  • Full legal name.
  • Date of birth.
  • Residential street address.
  • Unique identifying number and issuing jurisdiction from a government-issued identification document (e.g., US driver’s license, US or foreign passport).
  • An image of the document that shows the unique identifying number.

Now keep in mind that there will be more than just the initial reporting. It is important to note that reports must be updated within 30 days in the following scenarios:

  • Change in beneficial ownership (e.g., through sale, merger, acquisition).
  • Death of a beneficial owner.
  • Discovery of inaccuracies in previously filed information.

For our Florida estate planning attorneys, the CTA has multiple implications including:

  • Considerations related to succession planning. In other words, when a business is part of a Florida estate plan, the change in ownership due to the death of a beneficial owner will necessitate a timely update under the CTA.
  • For clients involved in mergers or acquisitions, due diligence that ensures compliance with CTA reporting is vital.
  • The sensitive information required by the CTA may raise privacy concerns, necessitating discussions about data security and privacy measures.

The Corporate Transparency Act introduces significant changes in reporting requirements for legal entities. Staying abreast of these changes and guiding estate planning clients through compliance is essential for all Florida estate and elder law attorneys at this time and they can answer your questions. Understanding and preparing for the CTA’s implications will be crucial in ensuring that your estate and business planning strategies remain compliant and efficient.

We know this article may raise more questions than it answers. The Academy of Florida Elder Law Attorneys (AFELA) is the preeminent organization of Florida elder law attorneys providing advocacy, education and action on behalf of seniors and people with disabilities. We encourage you to contact one of our attorneys in your area using our Find a Lawyer website for assistance.