NMBC wants to remind business owners/principles of the obligations within the Corporate Transparency Act (CTA), which took effect in 2024. The CTA, part of the Anti-Money Laundering Act of 2020, introduces new obligations for many businesses to disclose beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN).
The good news is filing is performed electronically. The bad news is deadlines for many are fast approaching and fines for failing to comply are extensive.
Key Points of the CTA:
Reporting Requirements: Certain companies must report information on individuals who have substantial control or own at least 25% of the company. This includes their name, address, date of birth, and a unique identifying number from an acceptable identification document including a copy of the document to upload as part of the filing.
Penalties: Failure to comply with the reporting requirements can result in significant civil penalties of up to $591 per day and criminal penalties of $10,000 fine and/or up to two years of imprisonment.
Entities Subject to Reporting Requirements:
Most small and newly formed corporations, limited liability companies (LLCs), and other similar entities.
Common Exemptions:
- Tax-exempt entities (i.e., non-profits).
- Large operating entities that meet ALL the following criteria:
- Employ more than 20 people in the U.S.
- Had gross revenue/sales greater than $5M on the prior year tax return.
- Have a physical office in the U.S.
Be Aware – these exemptions are evaluated on an individual entity basis, all separate legal entities under common ownership and control will need to be independently evaluated for compliance and filing.
Reporting Deadlines:
- Entities in existence as of January 1, 2024, must file by January 1, 2025.
- Entities created/formed during the calendar year 2024 must file within 90 days of formation.
- Entities created/formed subsequent to December 31, 2024, must file within 30 days of formation.
Any changes to previously filed information (e.g., ownership changes) must be filed within 30 days of those changes occurring.
More Information: Financial Crimes Enforcement Network (“FinCEN”) web site www.fincen.gov/boi.
Please contact our office at (505) 836-4223 or Pulakos CPA’s at (505) 338-1500 or at 1-888-910-CPAS (2727), if you have questions/concerns regarding the CTA requirements.