NEW LAW
Do You Have an “Beneficial Ownership” Interest in a Business?
The Corporate Transparency Act (CTA) May Apply To You.
Reporting Requirements &[1] Penalties for Failing to Report.
The CTA was enacted in 2021 to combat illicit activity including tax fraud, money laundering, and financing for terrorism by capturing more ownership information for specific U.S. businesses operating in or accessing the USA’s market. Under the CTA, which went into effect on January 1, 2024, many U.S. small business owners are required to file, with the U.S. Department of Treasury, corporate transparency reports with “beneficial ownership” information.
Does this apply to You? Yes, if you directly or indirectly own or control a company.
What is beneficial ownership information? This refers to identifying information about the individuals who directly or indirectly own or control a company. The information includes name, birthdate, address, identifying number (such as driver’s license). The company must also submit information about itself.
What are the filing deadlines? Existing Companies Have One Year to File. New Companies Must File Within 90 Days of Creation or Registration. Companies that are required to comply (“reporting companies”) must file their initial reports by the following deadlines:
- Existing companies: Reporting companies created or registered to do business in the United States before January 1, 2024 must file by January 1, 2025.
- Newly created or registered companies: Reporting companies created or registered to do business in the United States in 2024 have 90 calendar days to file after receiving actual or public notice that their company’s creation or registration is effective.
What are the Penalties? Those who fail to file by this deadline — or fail to update this information if needed — could face up to two years imprisonment and fines up to $10,000, in addition to civil penalties of up to $591 per day.
How to File – The United States Department of the Treasury has “FinCEN” providing small businesses with resources and information they need for free filing as easy as possible. FinCEN’s Small Entity Compliance Guide walks small businesses through the requirements in plain language. Filers can also view informational videos and webinars, find answers to frequently asked questions, connect to the contact center, and learn more about how to report at www.fincen.gov/boi.
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[1] U.S. Beneficial Ownership Information Registry Now Accepting Reports, January 1, 2024, US. Department of the Treasury.
