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A new federal law called the Corporate Transparency Act (CTA) aimed at combatting money laundering took effect on January 1, 2024. 

The CTA requires both existing closely-held, private businesses, as well as new ones formed after January 1, 2024, to file a report with the US Department of the Treasury to disclose information about the business’s “beneficial owners”. Beneficial owners exercise substantial control over the “reporting company” or they own or control at least 25% of the reporting company’s ownership. This requirement already exists in most first-world countries and the US is now imposing these disclosure requirements. No later than December 31, 2024, most small, privately-held companies existing prior to January 1, 2024, will be required to make a filing with the Financial Crimes Enforcement Network (FinCEN). Companies formed on January 1, 2024, and afterward must file such a report no later than 90 days after forming the company. While there are some exemptions from being considered a reporting company, this will affect most small businesses.

Detailed Breakdown of Information to be Disclosed by Beneficial Owners

Beneficial owners will be required to disclose the following information: (1) the full legal name of the reporting company; (2) any trade name or “doing business as” name of the reporting company; (3) the complete current street address of the reporting company’s principal place of business; and (4) the Internal Revenue Service (IRS) Taxpayer Identification Number (TIN).

The CTA also requires reporting companies to disclose basic information about its beneficial owners, including their: (1) legal name, (2) date of birth, (3) residential street address, and (4) an image containing an identifying number from a government-issued identification document such as a passport or driver’s license. 

Secure Electronic Filing with FinCEN: Compliance and Consequences

You can file this information electronically through a secure filing system available via FinCEN’s website. 

The willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may result in a civil or criminal penalties, including civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI report may be held accountable for that failure.

You can also find more information and updates on our website at Hughes Legacy Law. You can also contact us here for help or give us a call at 703-977-1139.