Corporate Transparency Act
The Bass, Berry & Sims multidisciplinary Corporate Transparency Act (CTA) Team has been closely monitoring the CTA, which goes into effect on January 1, 2024. Under this law, various types of businesses in the United States – such as corporations, limited liability companies, and limited partnerships – must report their beneficial ownership information to the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN). The CTA aims to enhance transparency by disclosing who controls these businesses in order to detect and prevent money laundering, fraud, and other unlawful activity.
Not every entity or business is subject to the CTA's reporting requirements, and certain exemptions apply. The Bass, Berry & Sims CTA Task Force will continue to monitor developments and publish regular updates to help impacted companies navigate the law and their reporting and compliance obligations.
Please note, the information provided here is intended to serve as helpful guidance and may not encompass every nuance of the CTA rules. We encourage you to reach out to any member of the Bass, Berry & Sims CTA Task Force with any questions you may have or to confirm what specifically may be required for entities subject to the CTA rules.
Frequently Asked Questions
A domestic “Reporting Company” is any corporation, limited liability company, limited partnership or other entity formed under applicable law by filing an organizational document with any state, U.S. territory, the District of Columbia or U.S. Indian tribe that does not qualify for one of the 23 statutory exemption categories under the CTA.
A foreign “Reporting Company” is any business entity organized outside of the U.S. that is registered to do business in the United States by filing a document with any state, U.S. territory, the District of Columbia or U.S. Indian tribe and that does not qualify for an exemption under any of the 23 categories listed below.
Entities such as unincorporated sole proprietorships, general partnerships and trusts whose formation is not contingent upon the public filing of an organizational document with a state secretary of state (or comparable governmental agency) are not treated as Reporting Companies under the CTA.
The following 23 categories of entities are statutorily exempt from any CTA filings and are not classified as “Reporting Companies”:
- Securities reporting issuers (required to file ’34 Act periodic reports).
- U.S., state and local governments, and instrumentalities, agencies and subdivisions.
- Banks.
- Federal and state licensed credit unions.
- Bank holding companies and savings and loan holding companies.
- Registered money services businesses.
- SEC registered broker or dealers in securities.
- SEC registered securities exchange or clearing agencies.
- Other SEC registered ‘34 Act entities.
- SEC registered investment companies and SEC registered investment advisers.
- Venture and private equity capital fund advisers (files Form ADV with SEC).
- Insurance companies.
- State-licensed insurance producers.
- Commodity Exchange Act registered entities (e.g., commodity trading advisors, futures commission merchants, and commodity pool operators).
- Public accounting firms registered with PCAOB.
- Regulated public utilities.
- Financial market utilities.
- Pooled investment funds/vehicles (VC funds and larger PE buy-out and hedge funds).
- Tax-exempt non-profit entities referenced in IRC 501(c) and exempt from U.S. taxation under IRC 501(a); and political organizations referenced in IRC Sec. 527.
- Entities (owned and controlled by U.S. persons) exclusively assisting a tax-exempt non-profit entity.
- Large operating companies (more than 20 full-time employees and more than $5 million of annual revenues shown on its most recent tax return).
- Subsidiaries. Companies whose equity is “controlled or wholly-owned” by one or more entities described in the exempt categories listed in this chart other than categories 6, 18 and 20 above and 23 below.
- Inactive entities (formed prior to 2020, inactive and with less than $1,000 in assets).
Each Reporting Company must include the following in its initial BOI Report submission:
Entity-related identifying information about the Reporting Company:
- Entity’s full legal name.
- Any trade name, “doing business as” (d/b/a) or “trading as” (t/a) names.
- Current street address of the principal place of business, if the principal place of business is in the United States, or if the principal place of business is outside the United States, the current street address from which the company conducts business in the United States.
- Jurisdiction of formation or registration.
- IRS Taxpayer Identification Number.
Individual-related information about each (controlling) “Beneficial Owner”:
- Beneficial Owner’s full legal name.
- Date of birth.
- Residential street address.
- Unique identifying number from an acceptable identification document, including:
- Non-expired driver’s license.
- Non-expired identification document issued by a U.S. state or local government for the purposes of identifying the individual.
- Non-expired passport issued by the U.S. government.
- If none of the three forms above are applicable, non-expired passport issued by a foreign government.
- Image of the identification document.
- Name of the state or jurisdiction that issued the identification document.
The CTA Rule defines “Beneficial Owners” as any individual who either (i) directly or indirectly “owns or controls not less than 25% of the ownership interests of the entity” OR (ii) “directly or indirectly…exercises substantial control over [the] Reporting Company.”
The CTA does not cap the number of Beneficial Owners that may be listed on an initial BOI Report.
Individual-related information about each “Company Applicant”:
Each Reporting Company that forms after December 31, 2023 (or first registers to do business in the United States after December 31, 2023) must include on its initial BOI Report the same individual-related information required of a Beneficial Owner for at least one but no more than two “Company Applicants.” The CTA Rule defines “Company Applicants” as the individual who “files” the document that creates a U.S. domestic business entity or registers a non-U.S. business entity to do business in the U.S., and, if more than one individual is involved in the filing of the document, the individual who is “primarily responsible” for directing or controlling such filing. No more than two individuals per Reporting Company are subject to “applicant” disclosure.
| Reporting Type | Reporting Deadline |
| Initial Report for Reporting Companies in existence on Dec. 31, 2023 | No Later than Jan. 1, 2025 |
| Initial Report for Reporting Companies formed after Dec. 31, 2023 and before Jan. 1, 2025 | Within 90 days of formation |
| Initial Report for Reporting Companies formed on or after Jan. 1, 2025 | Within 30 days of formation |
| Amendments, Updates and Corrections*
*Does not apply to Company Applicant BOI Report information |
Within 30 days of the relevant change or awareness of need of correction |
Note that while annual updates to BOI Reports are not required by the CTA Rule, should any information previously reported change (e.g. a beneficial owner moves to a new residential address), the 30 day update timeline would apply at the time the Reporting Company becomes aware of the change.
On March 1, 2024, a Federal District Judge in the Northern District of Alabama held that the CTA is unconstitutional, ruling that the scope of the CTA exceeded Congress’s permissible authority to regulate interstate commerce. In its final judgment, the District Court enjoined the federal government from enforcing the CTA against the plaintiffs – the 65,000 members of the National Small Business Association.
Notably, the District Court’s decision only applies to the plaintiffs in the case. The U.S. government is expected to appeal the court ruling, but this is not anticipated to delay implementation of the CTA to any entities that are not a party to the litigation.
Presently, in the absence of more clarifying guidance from FinCEN or a later court ruling, prudence suggests that companies should proceed, including taking compliance measures, as if the current CTA regulations will remain in effect.
Our CTA Task Force has put together some additional resources to help you stay informed on the latest developments related to this new law.
- Filing Information
- FinCEN Resources / Guidance
The Bass, Berry & Sims multidisciplinary Corporate Transparency Act (CTA) Team has been closely monitoring the CTA, which goes into effect on January 1, 2024. Under this law, various types of businesses in the United States – such as corporations, limited liability companies, and limited partnerships – must report their beneficial ownership information to the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN). The CTA aims to enhance transparency by disclosing who controls these businesses in order to detect and prevent money laundering, fraud, and other unlawful activity.
Not every entity or business is subject to the CTA's reporting requirements, and certain exemptions apply. The Bass, Berry & Sims CTA Task Force will continue to monitor developments and publish regular updates to help impacted companies navigate the law and their reporting and compliance obligations.
Please note, the information provided here is intended to serve as helpful guidance and may not encompass every nuance of the CTA rules. We encourage you to reach out to any member of the Bass, Berry & Sims CTA Task Force with any questions you may have or to confirm what specifically may be required for entities subject to the CTA rules.
Frequently Asked Questions
A domestic “Reporting Company” is any corporation, limited liability company, limited partnership or other entity formed under applicable law by filing an organizational document with any state, U.S. territory, the District of Columbia or U.S. Indian tribe that does not qualify for one of the 23 statutory exemption categories under the CTA.
A foreign “Reporting Company” is any business entity organized outside of the U.S. that is registered to do business in the United States by filing a document with any state, U.S. territory, the District of Columbia or U.S. Indian tribe and that does not qualify for an exemption under any of the 23 categories listed below.
Entities such as unincorporated sole proprietorships, general partnerships and trusts whose formation is not contingent upon the public filing of an organizational document with a state secretary of state (or comparable governmental agency) are not treated as Reporting Companies under the CTA.
The following 23 categories of entities are statutorily exempt from any CTA filings and are not classified as “Reporting Companies”:
- Securities reporting issuers (required to file ’34 Act periodic reports).
- U.S., state and local governments, and instrumentalities, agencies and subdivisions.
- Banks.
- Federal and state licensed credit unions.
- Bank holding companies and savings and loan holding companies.
- Registered money services businesses.
- SEC registered broker or dealers in securities.
- SEC registered securities exchange or clearing agencies.
- Other SEC registered ‘34 Act entities.
- SEC registered investment companies and SEC registered investment advisers.
- Venture and private equity capital fund advisers (files Form ADV with SEC).
- Insurance companies.
- State-licensed insurance producers.
- Commodity Exchange Act registered entities (e.g., commodity trading advisors, futures commission merchants, and commodity pool operators).
- Public accounting firms registered with PCAOB.
- Regulated public utilities.
- Financial market utilities.
- Pooled investment funds/vehicles (VC funds and larger PE buy-out and hedge funds).
- Tax-exempt non-profit entities referenced in IRC 501(c) and exempt from U.S. taxation under IRC 501(a); and political organizations referenced in IRC Sec. 527.
- Entities (owned and controlled by U.S. persons) exclusively assisting a tax-exempt non-profit entity.
- Large operating companies (more than 20 full-time employees and more than $5 million of annual revenues shown on its most recent tax return).
- Subsidiaries. Companies whose equity is “controlled or wholly-owned” by one or more entities described in the exempt categories listed in this chart other than categories 6, 18 and 20 above and 23 below.
- Inactive entities (formed prior to 2020, inactive and with less than $1,000 in assets).
Each Reporting Company must include the following in its initial BOI Report submission:
Entity-related identifying information about the Reporting Company:
- Entity’s full legal name.
- Any trade name, “doing business as” (d/b/a) or “trading as” (t/a) names.
- Current street address of the principal place of business, if the principal place of business is in the United States, or if the principal place of business is outside the United States, the current street address from which the company conducts business in the United States.
- Jurisdiction of formation or registration.
- IRS Taxpayer Identification Number.
Individual-related information about each (controlling) “Beneficial Owner”:
- Beneficial Owner’s full legal name.
- Date of birth.
- Residential street address.
- Unique identifying number from an acceptable identification document, including:
- Non-expired driver’s license.
- Non-expired identification document issued by a U.S. state or local government for the purposes of identifying the individual.
- Non-expired passport issued by the U.S. government.
- If none of the three forms above are applicable, non-expired passport issued by a foreign government.
- Image of the identification document.
- Name of the state or jurisdiction that issued the identification document.
The CTA Rule defines “Beneficial Owners” as any individual who either (i) directly or indirectly “owns or controls not less than 25% of the ownership interests of the entity” OR (ii) “directly or indirectly…exercises substantial control over [the] Reporting Company.”
The CTA does not cap the number of Beneficial Owners that may be listed on an initial BOI Report.
Individual-related information about each “Company Applicant”:
Each Reporting Company that forms after December 31, 2023 (or first registers to do business in the United States after December 31, 2023) must include on its initial BOI Report the same individual-related information required of a Beneficial Owner for at least one but no more than two “Company Applicants.” The CTA Rule defines “Company Applicants” as the individual who “files” the document that creates a U.S. domestic business entity or registers a non-U.S. business entity to do business in the U.S., and, if more than one individual is involved in the filing of the document, the individual who is “primarily responsible” for directing or controlling such filing. No more than two individuals per Reporting Company are subject to “applicant” disclosure.
| Reporting Type | Reporting Deadline |
| Initial Report for Reporting Companies in existence on Dec. 31, 2023 | No Later than Jan. 1, 2025 |
| Initial Report for Reporting Companies formed after Dec. 31, 2023 and before Jan. 1, 2025 | Within 90 days of formation |
| Initial Report for Reporting Companies formed on or after Jan. 1, 2025 | Within 30 days of formation |
| Amendments, Updates and Corrections*
*Does not apply to Company Applicant BOI Report information |
Within 30 days of the relevant change or awareness of need of correction |
Note that while annual updates to BOI Reports are not required by the CTA Rule, should any information previously reported change (e.g. a beneficial owner moves to a new residential address), the 30 day update timeline would apply at the time the Reporting Company becomes aware of the change.
On March 1, 2024, a Federal District Judge in the Northern District of Alabama held that the CTA is unconstitutional, ruling that the scope of the CTA exceeded Congress’s permissible authority to regulate interstate commerce. In its final judgment, the District Court enjoined the federal government from enforcing the CTA against the plaintiffs – the 65,000 members of the National Small Business Association.
Notably, the District Court’s decision only applies to the plaintiffs in the case. The U.S. government is expected to appeal the court ruling, but this is not anticipated to delay implementation of the CTA to any entities that are not a party to the litigation.
Presently, in the absence of more clarifying guidance from FinCEN or a later court ruling, prudence suggests that companies should proceed, including taking compliance measures, as if the current CTA regulations will remain in effect.
Our CTA Task Force has put together some additional resources to help you stay informed on the latest developments related to this new law.
- Filing Information
- FinCEN Resources / Guidance
Professionals
| Name | Phone | |
|---|---|---|
|
Shelby Bess Associate |
(901) 543-5723 | Shelby.bess@bassberry.com |
|
Christopher J. Climo Associate |
(615) 742-7741 | christopher.climo@bassberry.com |
|
Faith Dibble International Trade Attorney |
(202) 827-2965 | faith.dibble@bassberry.com |
|
B. Riney Green Member |
(615) 742-7866 | rgreen@bassberry.com |
|
Angela Humphreys Member |
(615) 742-7852 | ahumphreys@bassberry.com |
|
Danielle M. Hunt Associate |
(615) 742-7788 | Danielle.Hunt@bassberry.com |
|
Todd R. Overman Member |
(202) 827-2975 | toverman@bassberry.com |
|
Katherine Smalley Associate |
(615) 742-7709 | katie.smalley@bassberry.com |
|
Ryan D. Thomas Member |
(615) 742-7765 | rthomas@bassberry.com |