The Corporate Transparency Act (CTA) has been a hot topic for small business owners since its inception. As we approach its effective date on January 1, 2024, it’s crucial to understand CTA’s implications for small businesses. Below, attorneys in PilieroMazza’s Business & Transactions Group offer guidance to small business owners and their senior officers on CTA compliance and potential criminal and monetary penalties for failure to report information required by the CTA.
Background
As reported by PilieroMazza, the CTA is legislation enacted by Congress in 2021 that requires privately held U.S. businesses to report certain identifying information for all “beneficial owners” of such businesses to the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN); the result of the reporting will be a central registry of beneficial owners that can be searched by various governmental entities.
While the CTA was passed with the noble goal of identifying and preventing money laundering through shell companies, its cumbersome reporting and compliance requirements will impact nearly every small business entity in the country. Also, as is typical with new legislation, many of the key details of the CTA were not initially clear. While the CTA waters remain murky, continue reading below for important updates on the CTA and its applicability to small businesses.