What is the Corporate Transparency Act?

The CTA is a federal law enacted to combat money laundering, tax fraud, and other illicit financial activities by exposing “bad actors” who hide behind anonymous shell companies. It requires businesses to report Beneficial Ownership Information (BOI) to the Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Treasury.

Does My Small Business Need to File?

As of early 2026, the reporting landscape has shifted due to significant deregulatory efforts and court rulings.

  • Foreign Reporting Companies: If your entity was formed under the law of a foreign country but is registered to do business in Tennessee, you must file a BOI report.

  • Domestic Entities (The 2025/2026 Update): Following an interim final rule published on March 26, 2025, entities created within the United States—including domestic LLCs and corporations—are currently exempt from the requirement to report BOI to FinCEN.

  • U.S. Persons: Beneficial owners who are U.S. citizens or residents are generally no longer required to provide their personal information to FinCEN for these domestic entities.

Who is Exempt?

Beyond the broad 2025 exemption for domestic entities, the CTA lists 23 specific categories of businesses that do not have to report:

  • Large Operating Companies: Entities with more than 20 full-time U.S. employees and over $5 million in annual gross receipts.

  • Highly Regulated Entities: Banks, credit unions, insurance companies, and publicly traded companies already subject to heavy federal oversight.

  • Tax-Exempt Entities: Most 501(c) nonprofits and certain political organizations.

  • Inactive Entities: Certain businesses that were in existence before January 1, 2020, but are no longer active.

Penalties for Non-Compliance

For the remaining “reporting companies” (primarily foreign entities), the penalties for willfully failing to file or providing false information are severe:

  • Civil Penalties: Fines of approximately $591 per day (adjusted for inflation) for as long as the violation continues.

  • Criminal Penalties: Fines up to $10,000 and up to two years of imprisonment.

  • This article is part of the Tennessee Business Law FAQs.
  • Related practice area: Business Law
  • Collins Legal is a Tennessee-based law firm providing straightforward legal guidance to individuals and businesses.