CORPORATE TRANSPARENCY ACT

Why You Should Be Concerned about the Corporate Transparency Act ("CTA")

New regulations came into effect as of January 1st, 2024, impacting nearly all corporations, partnerships, and LLCs across the United States. The Corporate Transparency Act mandates strict compliance, with both criminal and civil penalties applicable to those found non-compliant. Certain entities are required to take action by March 31st, 2024, while all others must comply by December 31st, 2024.

We are offering our clients business compliance solutions.

The Corporate Transparency Act Deemed Unconstitutional

Implications for You

On March 1st, 2024, a Federal District Court declared the Corporate Transparency Act unconstitutional. While the ruling appears to suggest a prohibition on the federal enforcement of the CTA, it, in fact, restricts enforcement only against the National Small Business Association and its members. If your business is not affiliated with the NSBA, the law remains applicable, and compliance is necessary.

Understanding the Corporate Transparency Act

The Corporate Transparency Act, effective from January 1st, 2024, mandates almost all entities in the US to submit Beneficial Ownership Information (BOI) regarding individuals holding significant ownership stakes or controlling the entity to the Department of Treasury's Financial Crimes Enforcement Network (FinCEN).

When to File Your Entity's BOI

Entities established after January 1st, 2024, must submit BOI reports within 90 days of formation. Those established before January 1st, 2024, including aged shelf companies, must file initial reports by January 1st, 2025.

Access to the FinCen BOI Database

Information within the FinCen BOI database will be accessible to federal law enforcement agencies, state and local law enforcement agencies with prior court approval, foreign agencies under specific conditions, and financial institutions and regulators for compliance with Know Your Customer requirements. The data will not be publicly available.

Annual Filing Requirement

BOI information does not require annual filing. However, any changes in address, ownership, or exempt status must be reported within 30 days of occurrence.

Penalties for Non-Compliance

The law stipulates both civil and criminal penalties for non-compliance. Individuals providing false information or failing to report complete or updated information may face civil penalties up to $500 per day of violation, fines up to $10,000, imprisonment up to two years, or both. Additionally, individuals may incur criminal liability under federal law for knowingly providing false information or concealing material facts.

Necessity of Privacy Packages

While BOI information remains private, state information is not. We recommend utilizing privacy packages to keep owner names off the state public record.

Impact on Aged Entities

Entities established before January 1st, 2024, have until December 31st, 2024, to report to the BOI database. Customers seeking additional time before filing with the BOI database are encouraged to consider purchasing one of our aged entities formed before January 1st, 2024.

Can Tresp Corporate Services File BOI Information for Customers?

Yes, we offer services for the initial BOI filing and ongoing maintenance of information in the FinCen BOI database. If you wish to receive further details regarding this service, please complete the form below.