Coming Soon … The Corporate Transparency Act and its effect on Small Businesses
On January 1, 2021, the United States Congress passed the Corporate Transparency Act (CTA) as part of the National Defense Authorization Act of Fiscal Year 2021. This Act affects mostly small business owners.
Corporations and LLCs formed before January 1, 2024 will be required to register with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), on or before January 1, 2025, and those formed on or after January 1, 2024 will be required to register within 30 days of formation. The information to be reported includes the identity of the beneficial owners of the Corporations and LLCs, along with a picture identification. Compliance with the CTA is mandatory and the penalties for non-compliance can be severe, including criminal penalties and imprisonment.
Corporations and LLCs that must report include organizations that have:
- Fewer than 20 full-time employees in the United States
- Less than $5 million in U.S.-sourced gross receipts or sales
- A physical operating presence in the United States
Corporations and LLCs that do not need to report are typically entities that are already required to report beneficial ownership information.
Stay tuned as we get closer to 2024 to see whether Congress makes any changes to this Act.