As the filing deadline for the Corporate Transparency Act (CTA) approaches, Sherman & Howard corporate and transactional attorney Jackie Benson discussed the background, definitions, requirements, and implications of the act with Law Week Colorado.

Below is an excerpt from the article.

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The act creates new disclosure requirements for certain companies, and it will largely affect smaller entities across the nation and Colorado. 

“Basically, what it requires is companies that are organized in the United States, or through certain tribal nations, need to report their beneficial ownership to FinCEN, which is part of the Department of Treasury, through an online filing system,” said Benson.

“For newly formed companies, you have to report who has organized the company,” said Benson. “In a lot of cases that’s the law firm. So that may be the attorney, or a paralegal or both.”

But there is a way to make the process swifter for attorneys, paralegals or business professionals who might be involved with several companies.

“You can get a FinCEN identifier, where you basically go into FinCEN and provide information about your name and your birth date, your address and all of that information, and then they give you a number,” said Benson. “And so thereafter, you can just report the number.”

“Generally, there are exceptions for companies where their ownership is already well known to the government through some other mechanism, because they’ve already got filing obligations,” said Benson. “Entities like chartered banks and chartered insurance companies, public utilities, brokers and investment advisors that are registered with the Securities and Exchange Commission, companies that are registered with the SEC, there’s some other exemptions like that.”

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Read the full article HERE. (Subscription required.)

About the CTA

The CTA was enacted as part of the Anti‑Money Laundering Act of 2020 on January 1, 2021, and requires certain companies to disclose beneficial ownership information and information about the parties who formed the organization to the US Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) commencing January 1, 2024. The CTA went into effect on January 1, 2024, and companies organized prior to that day must have their filings completed by January 1, 2025.  Companies formed during 2024 have 90 days from the date of organization to complete their filings.