Which businesses does the Corporate Transparency Act (CTA) apply to?
The CTA appears to apply to US entities (unless exempt), including US LLCs, C-Corps, S-Corps, and potentially LPs, LLPs. LLLPs. Wording such as “similar entities” and “similar office” means that we need to look at LPs, LLPs, and LLLPs and similar entities on a State-by-State basis. The reporting requirements apply to smaller, more lightly-regulated entities that are less likely to be subject to any other beneficial ownership requirements. Therefore, there are exemptions for certain categories of larger, more heavily-regulated entities from its reporting requirements.
A large company is defined as an entity that employs more than 20 full time employees in the US, has an operating presence at a physical office within the US, and filed a Federal income tax or information return in the US for the previous year demonstrating more than $5,000,000 in gross receipts or sales.
Foreign (non-US) entities that are registered to do business in a US state are also on the list. For example, if you have a foreign business that has real property in a State in the US, which requires you to register as doing business in the State with the secretary of State, you will be required to register under the CTA rules and FinCEN regulations, and report various information including beneficial owners. This assumes that there is no exemption that applies.
With foreign companies, the first question is whether the company is doing business in the US, and this opens up various questions, such as whether there is a State registration requirement as well as a requirement to register under the CTA. In addition, if your company is doing business in the US, are there any sales tax requirements, any corporate tax requirements, and would there be protections under a tax treaty? What each State defines as doing business in that State depends on each individual State’s rules, and a question for each business and their activities in that State. As an example, California State’s definition is transacting interstate business, which is business conducts repeated and successive business transactions (sales, deals etc) in California. Holding meetings or having bank accounts in California could be indications of this.