Corporate Transparency Act

In January, we posted an article of the Corporate Transparency Act (CTA), which had just gone into effect. Since then, more has been learned and we now know that this legislation affects most every closely-held business that qualifies as a “Reporting Entity”. We also know that those who ignore the requirements could face fines or even jail time. So that you understand the new law, we’re providing the following article from friend-of-the-firm, Veronica Law of Brackett & Ellis, PC.

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Corporate Transparency Act: What You Need to Know

For those individuals who own or manage a closely-held business entity, there is a new law that represents a significant development for reporting of “beneficial ownership information.” This law, known as the Corporate Transparency Act (CTA), took effect on January 1, 2024. Under the CTA, virtually all small/family business entities are now required to file reports with a federal agency known as the Financial Crimes Enforcement Network (“FinCEN”). These reports include detailed information regarding the companies and their “beneficial owners”– the people behind the companies. This new law applies to virtually all types of business entities, including those that merely hold real estate or conduct no active business. Even if an entity has only one owner and that entity is ignored for Federal income tax purposes (such as a single-member LLC), that entity is still required to file reports with FinCEN.

For entities that exist prior to January 1, 2024, the initial reports are due by January 1, 2025. For entities created on or after January 1, 2024, the initial reports are due within 90 days from the creation of the entity. Because there are significant civil and criminal penalties for failing to file under the CTA, this is something that cannot be neglected. If you hold any type of ownership interest in a closely-held entity, such as an LLC, corporation, or limited partnership, or if you exert control over an entity (which might include a position as an officer, director, manager, or chief financial officer), then you may be responsible for filing reports with FinCEN. 

For more detailed information on the background and reporting requirements of the CTA, you can access the official FinCEN website at https://www.fincen.gov/boi.  

Please contact my legal assistant, Mitzi Parris at mparis@belaw.com if you have any questions or if we can assist you in reporting the required information under this new law. 

Veronica Law