Navigating the New Corporate Transparency Act: What Businesses Need to Know

By Jeff Skoubye

jeff@snjlegal.com

(801) 365-1012

The Corporate Transparency Act (CTA), which came into effect on January 1, 2024, represents a significant shift in the regulatory landscape for businesses in the United States. This legislation mandates the reporting of beneficial ownership information for a wide range of business entities, including corporations, limited liability companies (LLCs), and other similar entities. The primary goal is to enhance transparency and combat financial crimes such as money laundering, fraud, and terrorism financing.

Understanding the Corporate Transparency Act:

The CTA requires both existing and newly formed entities to report information about their beneficial owners and company applicants. Existing entities are those created before January 1, 2024, while newly formed entities are those established on or after this date. The reporting requirements vary based on the date of formation:

Newly Formed Entities:

Must file their initial report within 30 days of their formation or registration.

Existing Entities:

Have until January 1, 2025, to submit their initial report. What Information Needs to Be Reported?

Entities subject to the CTA must report the following information about their beneficial owners and company applicants:

  • Full legal name
  • Date of birth
  • Current residential or business street address
  • A unique identifying number from an acceptable identification document (e.g., passport, driver’s license)

Where to File Reports:

Reports must be filed with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. Filings can be made electronically through FinCEN’s reporting portal.

Exemptions:

Certain entities are exempt from the reporting requirements, including publicly traded companies, government entities, banks, credit unions, and registered investment companies. It is important to consult with legal counsel to determine whether an entity qualifies for an exemption.

Penalties for Non-Compliance:

Failure to comply with the CTA can result in significant penalties, including civil penalties of up to $500 per day for ongoing violations and criminal penalties of up to $10,000 and/or imprisonment for up to two years.

Conclusion

The Corporate Transparency Act is a crucial step forward in the fight against financial crime. Businesses must take proactive steps to understand their reporting obligations and ensure compliance with the new regulations. Seeking legal counsel to navigate the complexities of the CTA is advisable to ensure full compliance and avoid potential penalties.

Skoubye, Nielson, Johansen Attorneys Salt Lake City Utah

By Jeff Skoubye

jeff@snjlegal.com

(801) 365-1012

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