CPA Perspective on the Corporate Transparency Act



In 2021, the U.S. Congress enacted the Corporate Transparency Act (CTA) to combat specific criminal activity, including money laundering and the use of shell companies to hide illicit funds. Under the CTA, all new, amended and existing entities that are/were created via registration with a secretary of state, including corporations, Limited Liability Companies and others, must provide certain information to the Financial Crimes Enforcement Network (FinCEN) for inclusion in a beneficial ownership information (BOI) database, Forbes reports1.

The information small- to medium-sized companies will be required to self-report under the CTA includes the following: the state of formation of the entity and its associated employer identification number (EIN), the business name, and current address. Additionally, for every direct or indirect “beneficial owner” of the entity, a name, birthdate, address and government issued photo ID will also be required1.

According to Focus Magazine, the information must be updated periodically and within 30 days of any changes. Furthermore, a beneficial owner can be anyone that meets the control test standard, including senior officers or executives. While there are some businesses exempt from the CTA, those exemptions apply mostly to those entities with offices in the U.S., more than 20 full-time employees, and $5 million or more in gross receipts from the previous year’s tax return2.

Aside from impacting reporting requirements for many CPAs and firms across the state of Michigan, the CTA will almost certainly affect the overwhelming majority of their small- to medium-sized business clients. The MICPA recognizes the potential challenges associated with ensuring clients are compliant by the effective date of Jan. 1, 2024, and is providing several online-live learning opportunities dedicated to this issue throughout the summer. Register for your courses on the MICPA Store and get ahead of the CTA for yourself, your firm and your clients. 

Source: MICPA

 Back to List