Corporate Transparency Act (CTA)

New Corporate Transparency Act (CTA) Reporting Requirements for Small Businesses in 2024.

Understanding the Changes

Starting in 2024, small business owners must adhere to new reporting obligations under the Corporate Transparency Act (CTA). This act, a key component of the Anti-Money Laundering Act of 2020 (AMLA), aims to combat illegal activities like money laundering through shell companies. Approximately 30 million small businesses will be affected, necessitating submissions to a federal database accessible to certain authorities.

Here is a summary of the CTA: CTA Reporting Deadlines & CTA Beneficial Owner

You can request our firm’s assistance in filing for the Corporate Transparency Act for a flat rate per entity: CTA filing assistance $400 per entity with a single owner – $100 for each additional owner.

Implementation and Compliance

A final rule details the CTA’s application, outlining compliance requirements and authorized agencies. Violations may result in severe penalties, including fines and imprisonment.

Purpose of the CTA

The CTA, part of the National Defense Authorization Act for Fiscal Year 2021, tasks the Financial Crimes Enforcement Network (FinCEN) with collecting ownership information from private companies. This move targets the misuse of anonymous corporations for criminal activities.

What Businesses Need to Report

As of January 1, 2024, specific businesses must disclose company and owner details to FinCEN. The criteria for reporting entities are defined, with deadlines varying based on the company’s formation date.

Small Business Opposition

Organizations like the National Small Business Association (NSBA) and the National Federation of Independent Businesses (NFIB) criticize the CTA for its complexity and potential constitutional issues. They highlight the disproportionate impact on small businesses lacking dedicated compliance resources.

Determining CTA Applicability

The CTA pertains to entities formed by filing with state authorities, including corporations, LLCs, and, in some states, other business structures. About 30 million small businesses are estimated to fall under this requirement, though there are notable exemptions.

Required Reporting Information

The CTA mandates the submission of detailed information about companies, their beneficial owners, and, in some cases, company applicants. This includes legal names, addresses, and identification details.

Access to Reported Information

FinCEN has the authority to share reported information with various government and financial entities, subject to specific conditions and restrictions.

Privacy Concerns and Legal Challenges

Privacy issues raised by small business owners have led to legal challenges against the CTA, focusing on the constitutionality of sharing sensitive information with the government.

Penalties for Non-Compliance

Failing to comply with CTA requirements can lead to substantial fines and imprisonment, although provisions exist for correcting unintentionally erroneous reports: $500 per day up to $10,000 and Two Years imprisonment.

Navigating the complexities of the CTA is challenging, especially for small businesses. Professional assistance can help in understanding the applicability and ensuring compliance, thereby avoiding potential penalties.