In early December, we let you know that a federal judge blocked the Corporate Transparency Act. As of December 23, 2024, a panel of judges reinstated the reporting guidelines. Then on December 26th, the Fifth Circuit Court issued an order vacating the December 23rd reinstatement.
What is the Corporate Transparency Act
The Corporate Transparency Act (CTA) was enacted to prevent corrupt entities from laundering illicit funds through anonymous companies in the United States, specifically to combat illicit activity such as tax fraud, money laundering and financing for terrorism. The CTA requires businesses that meet specific criteria to submit a Beneficial Ownership Information Report to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network [FinCEN].
Who would have had to report?
Most active corporations, LLCs, and other businesses formed by filing a document with a Secretary of State’s office in the United States. But there are many exceptions. You may Contact FinCEN to confirm whether your business is required to report or speak to your financial expert, like an accountant.
Who does not have to report?
Publicly traded companies, banks and other financial institutions, tax-exempt nonprofits, public utilities, and some large businesses. These are already subject to other regulatory requirements.
How do I report, and whose information?
Reporting companies will report beneficial ownership through FinCEN’s website. There is no fee for submitting this report.
What happens if I do not report??
If a business fails to comply with BOI reporting requirements, they can be subject to civil penalties of $500 per day (adjusted for inflation – $591 per day) and criminal penalties, including a $10,000 fine and/or up to two years of imprisonment.
What happens next?
It is unclear—as courts have just issued three recent contradictory decisions, nor is it clear what the next administration may do. With the December 23rd decision, there were four new deadlines for filing, and another court decision could do something similar. Businesses can voluntarily report now or watch to see if there is a new deadline(s).
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None of the information stated above is intended to be legal, tax, security, or financial advice.
Cardinal Services provides the information in this e-newsletter for general guidance only and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.
Consult your company’s legal counsel or financial professional for the latest city, county, state or federal laws concerning this newsletter topic.