The Corporate Transparency Act (CTA) went into effect on January 1, 2024

 In Regulatory

Suppose you are an officer of a corporation, manager of a limited liability company (“LLC”), or a general partner in a limited liability partnership (“LLP”). In that case, you must know that you may be required to file a Beneficial Owner form with the Department of Treasury, specifically the Financial Crimes Enforcement Network (“FinCEN”). Failure to file may subject you to a penalty of $500 per day and/or criminal prosecution, including a fine of up to $10,000 and/or up to two years in jail.

As part of the National Defense Authorization Act passed in 2021, the Corporate Transparency Act (“CTA”) is intended to help the Treasury Department root out money laundering and terrorist activities that are often shielded from through shell companies. Any corporation, LLC, or LLP formed and in existence as of December 31, 2023, must report to FinCEN by January 1, 2025. Any corporation, LLC, or LLP formed after December 31, 2023, but before January 1, 2025, must report to FinCEN within ninety (90) days of formation. Any corporation, LLC, or LLP formed after January 1, 2025, must report within thirty (30) days of formation. Reporting can be handled online at https://www.fincen.gov/boi.

The information that needs to be reported will vary depending on the individual and the nature of the reporting entity. Certain companies may be exempt from the reporting requirements. However, most companies will not fall within a limited exempted entity. The most likely exemption would be for a large operating company with a gross annual revenue of over $5,000,000 and at least 20 full-time employees.

The CTA has introduced significant, new compliance burdens on Reporting Companies. Please contact the Attorneys at Law Offices of Lipsey & Clifford if you have questions. We can help you navigate this new law by advising on a Reporting Company’s compliance obligations.

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