The Corporate Transparency Act (CTA) is a new law that could impact many business owners. If you have an interest in an LLC, corporation, partnership, or similar organization, this law may require you to act soon. Here’s what you need to know to stay compliant and avoid penalties.
What is the Corporate Transparency Act?
The Corporate Transparency Act (CTA) was created to track and control potential international money laundering. It requires certain business entities to report their beneficial ownership information to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). While the IRS is not involved, this information will be kept confidential and not available to the public.
Who Needs to Comply?
If you have an interest in an LLC, corporation, partnership, or similar organization, you’ll likely need to comply with the CTA. However, larger companies with more than 20 full-time employees, over $5 million in sales, and a physical presence in the U.S. are exempt.
Note: Even if you hold a small percentage (less than 25%) but have control over the entity, you may still be considered a beneficial owner and must report.
Key Deadlines for Reporting
- New entities (formed after January 1, 2024): Must report within 90 days of formation.
- Existing entities (formed before January 1, 2024): Must report by January 1, 2025.
- Ongoing Updates: Any changes to beneficial ownership must be reported within 30 days.
Penalties for Non-Compliance
Failure to comply with the CTA can lead to severe penalties:
- Civil fines: Up to $600 per day.
- Criminal fines: Up to $10,000 and/or two years imprisonment.
How to Comply with the CTA
To comply with the Corporate Transparency Act, you must file a Beneficial Ownership Information Report (BOIR) with FinCEN. This involves providing details about the beneficial owners of your entity.
What You Need to Do
- Obtain a FinCEN ID: You’ll need this ID to complete your filings and manage updates in the future.
- Contact Us: We are encouraging our clients to reach out to discuss how we can help, to please do so by November 8.
Keep Your Attorney Informed: How the Corporate Transparency Act Impacts Your Estate Plan
The Corporate Transparency Act (CTA) is a reminder of why it’s crucial to keep your estate planning attorney updated on any changes to your business interests. Understanding how the CTA impacts your estate plan is essential, and having up-to-date information ensures we can provide the best guidance possible. If you have questions about how the CTA may affect your plan, please don’t hesitate to reach out—we’re here to help.
