Disclaimer: Troutt Beeman, & Co's role related to the CTA is limited to awareness and education only. TBCo is not responsible for any collection of relevant ownership requirements, FinCEN filings or compliance with the new law. If you require further assistance, please contact your legal counsel.
Effective January 1, 2024, a new reporting requirement of the Corporate Transparency Act (CTA) for privately owned small businesses will be enforced. The Corporate Transparency Act (CTA) was enacted into law as part of the National Defense Act for Fiscal Year 2021. The CTA mandates that millions of entities report their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). Adherence to this new small business reporting requirement is critical for small business owners, as non-compliance can lead to severe penalties.
Under the CTA, starting Jan. 1, 2024, companies created or registered to do business in the U.S. [that have less than 20 full-time employee and less than $5,000,000 in gross receipts or sales in the previous year] must report information on their beneficial owners to FinCEN.
Reporting companies are any corporation, LLC or other entity created by a filing with a secretary of state. S Corps, C Corps and partnerships are also affected, as well as sole proprietors.
Reporting companies created prior to 2024 will have until January 1, 2025 to file its initial BOI report. Those created or registered on or after January 1, 2024, will have 90 days to file its initial beneficial ownership information report.
Failure to comply can mean steep fines (up to $500 each day after the deadline) and/or criminal action if ignored.
FinCEN is a bureau of the U.S. Department of the Treasury. The Director of FinCEN is appointed by the Secretary of the Treasury and reports to the Treasury Under Secretary for Terrorism and Financial Intelligence. FinCEN’s mission is to safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.
There are a lot of terrific, easy-to-read articles published about the CTA. Here are a few of our favorites.
United States Chamber of Commerce