The Corporate Transparency Act (CTA), which went into effect on January 1, 2024, requires new reporting obligations on limited liability companies (LLCs), corporations, and other similar entities. The stated reason of the CTA is to combat illicit activities such as money laundering and tax evasion by requiring these entities to disclose beneficial ownership information to the Financial Crimes Enforcement Network or (FinCEN).
Reporting Requirements
Who Must File:
- Reporting Companies: Includes most LLCs, corporations, and other entities formed by filing with the Secretary of State or an equivalent office. Exemptions do exist for certain regulated entities, such as banks and large operating companies.
What Information to Report:
- Beneficial Owners: Individuals who exercise substantial control or own at least 25% of the company. Details include full legal name, date of birth, address, and tax identification number.
- For entities formed after January 1, 2024, the individual responsible for filing formation documents must be reported.
When to File:
- Initial Reports: Entities created before 2024 must file by January 1, 2025. Those formed in 2024 have 90 days post creation, while entities formed in 2025 or later must file within 30 days.
- Updates and Corrections: Must be filed within 30 days of any change or correction to previously reported information.
Compliance and Penalties
Failure to comply with the CTA can result in significant penalties, including fines up to $10,000 and imprisonment for up to two years for willful violations. It is crucial for business owners to ensure timely and accurate reporting to avoid these consequences.
For more details or assistance with CTA reporting reach out to us at Meikle Financial Group.
Source for all information is FinCEN.Gov, specifically boiefiling.fincen.gov
