ICYMI: YOUR OBLIGATIONS UNDER THE NEW
“CORPORATE TRANSPARENCY ACT”
Have you heard about the new Corporate Transparency Act? Many businesses in the United States will soon be required to report information on their business and certain individuals with “Beneficial Ownership” of the business. I have attached a booklet prepared by the United States Department of the Treasury that you should find to be helpful.
The PUPOSE of the Corporate Transparency Act is in part to assist law enforcement in detecting criminal activity.
- When does reporting begin? Happy New Year! Reporting begins January 1, 2024. You cannot file a report before January 1, 2024. All reports will be done on-line.
- Who must report? There are several exemptions to reporting, including for those of you with large operating businesses. Interestingly, accounting firms are not required to report regardless of their size, but law firms are not excluded! Check the attached booklet to see if your business is exempt from reporting. For those of you with multiple businesses, remember to look at each business independently!
- When must I report?If your entity was formed before January 1, 2024, you must report no later than January 1, 2025. If your entity is formed after January 1, 2024, you are required to file within 30 days of receiving notification from your state department that the entity is formed.
- What must be reported about my business? Information on your business, such as legal name, trade name, address of the principal place of business in the United States, the state in which your business was formed, taxpayer ID information, and further information on each “Beneficial Owner” and, where applicable, the “Company Applicant.” The Company Applicant is the person who first filed paperwork for your business to be formed. This would be me, for several of you. (For businesses formed before 1/1/24, you do not report the Company Applicant. For businesses formed after 1/1/24, the Company Applicant information must be filed.)
- What must be reported about my company’s Beneficial Owner(s)? First, you will need to determine who are your Beneficial Owners. For some of you, the answer is going to be easy; for others, not so easy. The attached booklet will help you determine who are the Beneficial Owners of your business. Once you determine the Beneficial Owners, you are required to report their full legal name, place of birth, complete current address, and the individual’s unique identifying number (and this is not a social security number!) found on a U.S. Passport, a state driver’s license or other state identification document, or a foreign passport if the individual does not have any of these other identification documents. In addition, you are required to upload a copy of the particular document.
- What happens after I file? After your initial filing, you must report any changes about the company or its beneficial owners to the information previously provided within 30 days. This part might just be the part that trips you up! If you move your principal place of business, or if your beneficial owners change their residence, you are going to have to remember to update your filing. Read about when to update information beginning on page 45 of the booklet attached.
Those of us who will be considered a Company Applicant for those businesses we file to form will be filing for a unique ID of our own (in addition to our business filings) so that the only information a new business will need to file about us is our unique ID number.
For some, this is a lot, and may feel overwhelming. But don’t think about not providing this required information. The penalties for failure to comply include both criminal and civil penalties: imprisonment of up to 2 years, and monetary fines of $500 per day, up to $10,000.00. Penalties can be assessed personally against “Senior Officers” or the person(s) acting in that capacity).
If you need assistance with your filings after 1/1/24, please reach out to me! As always, I am here to help you!
Your friendly neighborhood lawyer,