The Federal Corporate Transparency Act

Abstract

The federal Corporate Transparency Act (CTA) became effective on January 1, 2024 and its applicability should be considered by all businesses in the United States.  The paper includes a discussion of the reasons for the CTA and its applicability to "Reporting Companies" as defined in the CTA.  Its applicability is very broad and the amount of information that must be disclosed is extensive in an effort to combat money laundering and other criminal activities.  The CTA is under the jurisdiction of the Financial Crimes Enforcement Network and there are criminal and civil sanctions for a failure to comply.  This paper is intended to guide businesses, their accountants, and their legal counsel through various issues that arise in determining whether the business in question is a "Reporting Company" and how to apply the rules.  This paper has been updated through events and new FAQs and rules through January 20, 2025 with an understanding that there is currently significant ongoing litigation in the federal courts that question the Constitutionality of the CTA.  With the new administration there is also the possibility that the CTA will be repealed.  Until there are definitive answers to those questions, the CTA is still law and, while enjoined, lawyers, accountants, and their clients should prepare for the ultimate reporting obligations should they become effective again.