Starting January 1, 2024, a significant number of businesses will need to submit beneficial ownership details to the Financial Crimes Enforcement Network (FinCEN). This action is a direct consequence of the Corporate Transparency Act (CTA), which was integrated into the National Defense Authorization Act for Fiscal Year 2021.
The CTA’s reporting mandates primarily affect small corporations, limited liability companies (LLCs), and similar entities. These entities are defined as having fewer than 20 full-time employees and having reported gross receipts or sales of $5 million or less in the previous year’s federal income taxes.
Companies and Entities That May Be Exempt
There are 23 types of entities which are exempt from this requirement. Among these are:
- Publicly traded companies that fulfill specific criteria
- Numerous nonprofits
- Some larger operating companies
Entities established before January 1, 2024, must submit their first report to FinCEN by January 1, 2025. Those formed in 2024 have a 90-day period post-creation or registration to submit their initial report. For entities created in 2025, the timeframe is 30 days.
The enactment of the CTA aims to assist the U.S. government in detecting and preventing money laundering, corruption, tax evasion, drug trafficking, fraud, and other criminal activities. By passing the CTA, Congress intended to make it more challenging for these illicit activities and their perpetrators to remain undetected by law enforcement.
NAHB Resources and Complimentary Webinar NAHB has compiled a list of frequently asked questions and essential resources on this topic, available here.
Additionally, NAHB is organizing a complimentary webinar on this subject. The webinar is scheduled for Wednesday, January 17, at 2 p.m. ET and will feature David King, a senior regulations advisor at FinCEN. He will discuss in detail the compliance requirements for business owners.