Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Saturday, May 18, 2024

Corporate Transparency Act: Understanding the Act and Its Implications

Screenshot 2024-05-18 at 10.23.35 AMThe Corporate Transparency Act (CTA), enacted on January 1, 2021, as part of broad anti-money-laundering and antiterrorism measures taken by Congress, is set to take effect on January 1, 2024. The CTA requires certain business entities (each defined as a “reporting company”) to file, in the absence of an exemption, information on their “beneficial owners” and, in some cases, “company applicants” with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury (Treasury). The information provided to FinCEN will not be publicly available, but FinCEN is authorized to disclose the information to certain agencies and other entities/persons.

At first blush, the CTA would not have large-scale implications on attorneys whose practices focus on real estate or trusts and estates. However, because of the large-scale use of holding companies involved in real property transactions and their common usage in holding assets indirectly owned by trusts, the CTA’s reporting obligations will likely apply to many, if not most, of these holding companies. The following article provides a general summary of the parts of the CTA, including which entities are considered reporting companies, how to identify a reporting company’s beneficial owners and company applicants, what information needs to be reported to FinCEN, when that information must be reported, and the penalties for non-compliance with the CTA.

The article goes into detail on what companies constitute a reporting company and exemptions under the act. It highlights certain more common exemptions like the Nonprofit Entity Exemption and the Subsidiary Exemption. 

For more information see Eric R. Tubbs "Corporate Transparency Act: Understanding the Act and Its Implications" American Bar Association Probate & Property, May 8, 2024.

https://lawprofessors.typepad.com/trusts_estates_prof/2024/05/corporate-transparency-act-understanding-the-act-and-its-implications.html

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