Three years ago, capitol hill passed legislation impacting the majority of small businesses. As part of the National Defense Authorization Act in 2021, the Corporate Transparency Act (CTA) went into effect January 1, 2024.
The laws stipulate reporting requirements from small businesses to the US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
Businesses will be required to submit a Beneficial Ownership Information Report. (BOI Report) This will disclose information about any individual with at least a 25% interest and company applicant if entity filed for after January 1, 2024.
- Link to FinCEN eFile page — BOI E-FILING (fincen.gov)
The purpose of the Act is aimed to quell shell companies used for money laundering, tax fraud, or financing terrorism.
Failure to report will result in stiff fines for owners. Additionally, steep penalties have been established for government officials of FinCEN should use or distribute any information reported. Officials can be fined up to $100,000 and receive a 10 year prison sentence.
While it sounds daunting, it appears that it is a simplistic form of basic information and a proof of identification. However, for those in need there are third parties gearing up to assist and provide services in light of the CTA.
US Department of Treasury’s Summary Video:
Learn More about Beneficial Ownership Information Reporting Requirements – YouTube
