Corporate Transparency Act 2024: Guide For File Corporate Transparency Act & Exemptions

Navigating the path of corporate rules can be a bit tricky, especially with good intentions. Take, for example, the Corporate Transparency Act (CTA), which kicked in on January 1, 2024. The CTA aims to tackle money laundering by making businesses disclose their beneficial owners. But, here’s the catch – there are deadlines and penalties for those who don’t comply. So, as a business owner, it’s crucial to grasp what the CTA is all about and how it might impact your venture.

About the Corporate Transparency Act

According to the CTA, certain businesses need to send a report about their Beneficial Ownership Information to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). This report should list the names of individuals who own at least 25% of the business or have “substantial control,” as explained on FinCEN’s FAQ page.

“Substantial control” can take different forms, either direct or indirect, like being a senior officer, having authority over senior officers’ hiring or removal, or influencing crucial decisions, as highlighted in FinCEN’s FAQ page. When submitting the report, you must disclose each beneficial owner’s name, date of birth, address, and provide an image of their driver’s license or passport.

For businesses established after January 1, 2024, the first report must be filed within 90 days of creation or registration. Those established before January 1, 2024, have until January 1, 2025, to file. Moreover, if there’s any change in your company’s beneficial ownership information, you must file an updated report within 30 days, as per FinCEN’s regulations. To file the report for your business, start by acquiring a FinCEN ID. You can obtain one and file the report through the provided links.

Exemptions

Certain entities, totaling 23 types, are exempt from this requirement. To determine if your company qualifies for any exemptions, I recommend reviewing FinCEN’s Small Entity Compliance Guide checklist.

Beware of Fraudulent Solicitations

FinCEN has issued a warning about fraudulent attempts to gather information from individuals and entities subject to CTA reporting requirements. Exercise caution, especially with emails titled “Important Compliance Notice” that prompt you to click on a URL or scan a QR code.

Penalties for Noncompliance

Failure to file a timely report can lead to severe penalties from FinCEN. Civil penalties of $500 per day per entity may apply, along with a $10,000 criminal penalty per entity and a potential two-year imprisonment. Clearly, the repercussions of noncompliance are significant.