How the Corporate Transparency Act Impacts Corporate Aviation

An article by Holland & Knight discusses the Corporate Transparency Act (CTA), which became effective earlier this year, and how it significantly impacts corporate aviation by requiring entities like special purpose LLCs and statutory trusts, often used to hold aircraft titles, to report their Beneficial Owners to the Financial Crimes Enforcement Network (FinCEN). 

A Beneficial Owner is any individual who owns 25% or more of an entity or exercises substantial control over it. Aircraft owners using these entities must ensure compliance by reporting and updating their ownership details if changes occur.

Entities formed before January 1, 2024, have until January 1, 2025, to file initial reports, while those created later have 30 to 90 days to submit, depending on their formation date. Exemptions may apply to certain entities, such as large operating companies with substantial U.S. operations, but many aviation-related structures will need to comply with CTA reporting.

Whether aircraft trusts need to report depends on their formation. The article notes that statutory trusts formed through state filings likely qualify as Reporting Companies, requiring disclosure of Beneficial Owners. Non-statutory registration trusts, common in corporate aviation, generally avoid this requirement. However, trust beneficiaries or those controlling the trust may still need to provide personal identifying information (PII).

Aircraft management companies and personnel like chief pilots are generally not considered Beneficial Owners unless they hold substantial decision-making power in the entity. Owners of corporate aviation assets should assess their entity structures now to determine if CTA obligations apply and prepare for Beneficial Ownership Information filings to avoid penalties for noncompliance.