The Corporate Transparency Act (CTA) is now in effect. Initial reports are due before the end of 2024, and updates will be required annually. This overview is meant to provide a basic understanding of the law. However, we encourage you to speak with your trust advisors to ensure proper compliance.
Immediate Action Required to Avoid Risk
Failing to properly file under the Corporate Transparency Act (CTA) can lead to substantial penalties and legal risks. Failure to comply with the Corporate Transparency Act may result in civil fines of up to $10,000 for each violation.
What is the Corporate Transparency Act?
The CTA, coming into force on January 1, 2024, mandates the disclosure of beneficial owners of certain US and foreign business entities to a new national registry. This measure aims to enhance transparency and combat financial crimes.
Entities Required to Report:
- Domestic Entities: Includes corporations, LLCs, partnerships, certain trusts, and other entities established through a Secretary of State.
- Foreign Entities: Business entities formed outside the US but registered to conduct business within any US state or territory.
Exemptions Include:
- Public companies, banks, credit unions, investment funds.
- Any entity that employs more than 20 full time employees in the United States, has an operating presence at a physical office within the United States, and filed a Federal income tax or information return in the United States for the previous year demonstrating more than $5,000,000 in gross receipts or sales.
- Sole proprietorships, non-profit organizations, religious institutions.
- Foreign governments and diplomatic missions.
For a full list of exemptions and detailed guidance, please visit the Fincen BOI FAQ page.
Important Compliance Dates:
- For Existing Entities: Must report by January 1, 2025.
- For New Entities (Formed in 2024): Must report within 30 days of formation.
Non-compliance Penalties: Failure to comply may result in severe civil and criminal penalties.
Self-Filing Compliance:
Self-filing is an option, but we strongly recommend consulting with legal or accounting experts, especially in complex situations. Failing to properly file under the CTA can lead to substantial penalties and legal risks. Regular updates to your information with FinCEN are also essential.
The BOI E-Filing portal is designed to facilitate your reporting process.
Additional Resources:
For further assistance, WGA is here to help. Contact us at 239-435-1533.