Effective January 1, 2024, the Corporate Transparency Act (the “CTA”) requires every corporation, LLC, or other entity created by the filing of a document with a Secretary of State to file a report disclosing information regarding its beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”). Those businesses created in the United States and not exempt are referred to as “reporting companies” and are required to submit the information by filing a Business Ownership Information (“BOI”) Report with FinCEN.

A domestic reporting company created before January 1, 2024 has to provide information about the company and about its beneficial owners.  A domestic reporting company created on or after January 1, 2024 has to provide information about the company, its beneficial owners, and its company applicants.

Reporting companies subject to the CTA are required to provide the following information regarding the entity: (i) full legal name; (ii) trade names or d/b/a names; (iii) address of the entity; (iv) the jurisdiction of formation or registration; and (5) the federal taxpayer identification number.

For each beneficial owner, the reporting company must provide the following: (i) full legal name; (ii) birthdate; (iii) home address; (iv) an identifying number from a driver’s license, passport, or other approved documents; and (v) an image of the approved document that contains the identifying number. In lieu of (iv) and (v), an individual can apply for a FinCEN identifier number, after which the individual is permitted to use the identifier number on subsequent filings.

A domestic reporting company created before January 1, 2024 must file its initial BOI report by January 1, 2025.

A domestic reporting company created on or after January 1, 2024 and before January 1, 2025 must file a report within 90 calendar days of the date on which it receives actual or public notice that its creation has become effective.

A domestic reporting company created on or after January 1, 2025 must file a report within 30 calendar days of the date on which it receives actual or public notice that its creation has become effective.

According to Congress, this federal legislation providing for the collection of beneficial ownership information is needed to better enable efforts to counter money laundering, financing of terrorism, tax fraud and other illegal acts.  

Similarly, on December 22, 2023, New York State enacted the New York LLC Transparency Act (“NY LLC Act”), which takes effect on December 21, 2024. This law mirrors the CTA but its disclosure requirements only apply to limited liability companies formed or authorized to do business in New York.

Under the NY LLC Act, limited liability companies must file a beneficial ownership disclosure with the New York Department of State identifying each beneficial owner of the reporting company and providing: (i) the individual’s full legal name, (ii) date of birth, (iii) current business street address and (iv) a unique identifying number from a valid identification document. 

The NY LLC Act requires limited liability companies formed or registered to do business in the State of New York on or before December 21, 2024 to file an initial disclosure with New York Department of State no later than January 1, 2025.  For a reporting limited liability company formed or registered to do business in the State of New York after December 21, 2024, the initial disclosure is due at the time of filing of the articles of organization or application for authority. 

We expect there to be additional guidance released regarding the NY LLC Act before it takes effect and possible amendments to same.  Since the CTA is already in effect, businesses should implement policies and practices to ensure compliance with the new law.  We will continue to monitor any developments pertaining to the new laws and will keep you informed about any updates.  Should you have any questions or need assistance with submission process, please contact Ali Law Group.