The new year is here, and with-it new regulations that can affect YOU. If you are a business owner with a company in the United States, then you need to comply with the Corporate Transparency Act as soon as possible, or penalties of $500 per day may be imposed.
What is the Corporate Transparency Act?
The Corporate Transparency Act (CTA) is a legislation that mandates specific corporations, limited liability companies (LLCs), and similar entities to report their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), a government agency dedicated to combating financial crimes.
Who is Considered a Beneficial Owner?
A beneficial owner is an individual who owns or controls at least 25% of a business entity or wields substantial power over it. This definition excludes individuals who act on behalf of another person.
The CTA applies to corporations, LLCs, and other entities formed or registered in the U.S., unless they fall into categories of being large, regulated, or exempt. Criteria for exemption include:
- Having more than 20 full-time employees in the United States.
- Reporting more than $5 million in gross receipts or sales in the previous year.
- Being regulated by specific federal agencies, such as banks, insurance companies, public companies, and charities.
Business entities must report the name, birthdate, address, and ID number of each owner, along with their own information, to FinCEN beginning January 1, 2024, or upon formation or registration. Updates must be submitted within a year of any changes.
FinCEN will maintain this information in a secure and private database, sharing it only with authorized government agencies and financial institutions for law enforcement, national security, or regulatory purposes.
Penalties for Non-Compliance
Failure to report or update beneficial ownership information or provide false data may result in civil penalties from $500 per day and of up to $10,000 per violation and criminal penalties of up to two years imprisonment. Intentional disclosure or unauthorized use of beneficial ownership information may incur civil penalties of up to $250 per violation and criminal penalties of up to five years imprisonment.
At Legacy Counsel, we can help you comply with this new regulation. If you want to know the steps, you can schedule a 15-minute free call here.
