Compliance with the Corporate Transparency Act: What You Need to Know

As many of you may be aware, there has been significant legal activity surrounding the Corporate Transparency Act (CTA). Recently, a court case challenging aspects of the CTA was decided, and the case is currently on appeal. Despite this ongoing litigation, it is crucial for businesses to understand that compliance with the CTA remains mandatory.

Key Compliance Deadlines and Requirements:

Existing Entities:
- If your business existed prior to the lawsuit, does not fall under one of the 23 exemptions and was not a member of the National Small Business Association (NSBA) as of March 1, 2024, you must comply with the Beneficial Ownership Information Reporting (BOIR) requirements.
- Deadline: The BOIR filing is due to the Financial Crimes Enforcement Network (FinCEN) by the end of this year. It’s essential not to delay this process to avoid penalties.
New Entities:
- For any new business entities formed and not exempted from the CTA, the BOIR filings are required.

Deadline: You must submit your BOIR filings within 90 days of the formation filing with the state. This requirement ensures that FinCEN has up-to-date information on the beneficial owners of newly formed entities.

Why Compliance is Critical

The CTA was enacted to increase transparency and combat illicit activities such as money laundering, terrorism financing, and other financial crimes. By requiring entities to report beneficial ownership information, the government aims to create a more transparent and accountable business environment.

Steps to Ensure Compliance

Identify Beneficial Owners: Determine who qualifies as a beneficial owner under the CTA. Typically, this includes individuals who own or control 25% or more of the entity or exercise substantial control over the entity.
Prepare Required Information: Gather the necessary information for each beneficial owner, including full legal names, dates of birth, residential or business addresses, and unique identifying numbers from acceptable identification documents.
Submit BOIR Filings: Ensure timely submission of BOIR filings through the FinCEN system. For existing entities, make sure to meet the end-of-year deadline. For new entities, adhere to the 90-day submission requirement.
Stay Informed: Keep up with any updates or changes in the law, especially considering the ongoing appeal. Legal requirements may evolve, and staying informed will help ensure continuous compliance.

Conclusion

Despite the current legal challenges to the Corporate Transparency Act, compliance remains mandatory for both existing and new business entities. Failing to comply can result in significant penalties. Ensure your business meets the BOIR filing deadlines to remain in good standing with FinCEN.

If you have any questions or need assistance with your BOIR filings, please feel free to contact our office. We are here to help you navigate these requirements and ensure your business remains compliant.

Contact Us today for more information and support with your Corporate Transparency Act compliance needs.