The Corporate Transparency Act, which goes into effect on January 1, 2024, may require small businesses to report information about ownership to the government.
- Takes effect January 1, 2024
- Established businesses that qualify for reporting must file by January 1, 2025.
- Reporting details include business information, legal name, trademarks, and beneficial owners.
What it means: The Corporate Transparency Act (CTA) aims to combat illicit activity including tax fraud, money laundering, and financing for terrorism by capturing more ownership information for specific U.S. businesses operating in or accessing the country’s market. Under the new legislation, businesses that meet certain criteria must submit a Beneficial Ownership Information (BOI) Report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), providing details identifying individuals who are associated with the reporting company.
Why it matters: The CTA will impact millions of small businesses across the U.S. Knowing the intricacies of this act and its potential impact is essential for small businesses. Otherwise, they may incur criminal or civil penalties for not filing or updating this report.
Who needs to file? Refer to the flowchart below, found in section C.1. of the Beneficial Ownership Information FAQ document.
Who is exempt? Refer to section C.2. of the Beneficial Ownership Information FAQ document for more details on the 23 exempt entities (see table below).
Be aware: FinCEN’s website states the Department is aware of fraudulent attempts to solicit information from business subject to reporting requirements. FinCEN WILL NOT send unsolicited requests and any received should be considered fraudulent. Do not click on links or scan QR codes within that mail.