The Corporate Transparency Act (CTA) is a U.S. law that was passed in 2021. It requires certain businesses to disclose ownership information to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.
The federal law was created to increase business transparency and accountability to prevent illegal activities, particularly financial crimes including fraud, money laundering, and tax evasion.
There are 23 different entities that are exempt from the Corporate Transparency Act including different types of credit unions, insurance companies, public utilities, and securities exchanges. Any other corporation, however, would be subject to the Act’s reporting requirements.
The Corporate Transparency Act takes effect on January 1, 2024 and may impact:
- Directors and board members of rental properties
- Investment corporations
- Development corporations
- Rental property managers
- Investment property managers
- Development property managers
While the deadline for compliance with the CTA requirements is set for January 1, 2025, impacted corporations and individuals cannot ignore this new law and will need to demonstrate a sense of urgency to comply, including:
- Confirming the corporation and/or management company is subject to the Corporate Transparency Act
- Providing proper personal identification to the U.S. Department of the Treasury
- Filing the correct documentation with the U.S. Department of the Treasury
Additionally, the Act specifies that the U.S. Department of the Treasury must be updated if there are changes to board of directors after the corporation’s initial filing.
Next Steps for Corporate Directors, Board Members, and Property Managers
Based on the Corporate Transparency Act’s current broad language, a property management company could be defined as having “substantial influence over important decisions,” and be subject to the Act’s requirement along with the corporate directors.
Accordingly, directors and board members of rental property, investment and development corporations, and in some cases, management companies, would need to provide the required personal information and documents to the U.S. Department of the Treasury.
Directors and board members, along with their property managers, should reach out to legal counsel and accounting professionals to acquaint themselves with the filing requirements of the Corporate Transparency Act.
Legal Resource
Contact our law firm if you have questions regarding the Corporate Transparency Act, reporting requirements, and the Act’s potential impact to your corporation or rental/investment/development company.
KSN can assist in preparing the documentation that complies with the Act including protocols to promptly learn about any updates to their Personally identifiable information (PII) that must be submitted within the required reporting timeframe.
You can reach KSN by calling 855-537-0500 or visiting our website at www.ksnlaw.com.
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