By John M. Golaka | Kiplinger
On Jan. 1, 2024, the Corporate Transparency Act (CTA) becomes effective. Every new corporation, limited liability company (LLC), limited partnership and any entity whose existence is created by a filing with a Secretary of State in any state must file with the Financial Crimes Enforcement Network (FinCEN). More than 32 million entities are estimated to be affected.
This filing will require the business name, current address, state of formation and tax identification number for the entity. The filing will also require the name, birth date, address and a copy of a government-issued photo ID such as a driver’s license or passport of every direct and indirect owner. Each of the 32 million or more entities will almost certainly involve a filing by more than one person. The inclusion of this information for indirect owners creates both complexity and a very broad range of who qualifies as an indirect owner requiring filing of individual otherwise personal information. Penalties for failure to comply are high — $500 a day up to $10,000 and up to two years in jail (per occurrence).
The CTA was enacted on a bipartisan basis on Jan. 1, 2021. The broad definition of an owner and wide range of inclusion of owners’ personal information appears to be intentional. The stated purpose for the CTA is to combat money laundering and the concealment of illicit funds through “shell” corporations or other entities in the United States.
“If you’re doubtful about whether or not you need to file then, err on the side of caution and file.” – Rose Law Group Director of Corporate Transactions, Shruti Gurudanti
