Corporate Transparency Act
Congress passed the Corporate Transparency Act (CTA) in 2021, and its implementation was set to begin on January 1, 2024. This new legislation intends to root out money laundering, tax evasion, and other illegal activities. In effect, it requires that most businesses, corporations, partnerships, trusts, and LLCs comply by filing a Beneficial Ownership Information (BOI) with FinCen. The deadline for filing this information is December 31, 2024 for businesses that were in existence before December 31, 2023. For businesses formed after this date, reporting is either due 90 days after formation for businesses formed in 2024 or 30 days for businesses formed in 2025. Failure to file this information can result in the imposition of substantial civil penalties.
However, a recent federal tax court ruling has put a cloud over the legitimacy of the CTA. It is general consensus among practitioners that the Supreme Court will have the last word on whether the CTA is constitutional and reporting is required. We are recommending that companies that were in existence on December 31, 2023 wait until this fall to submit information to FinCen, when hopefully the controversy has been resolved. New entities should consult with their attorneys on whether to comply with the 90-day deadline in place for 2024.
To learn more about the CTA, check out the FinCen website here.