By Alex Montoya
If you own a small business, you have probably heard about the Corporate Transparency Act (the “CTA”), which will mandate new reporting requirements. In an effort to curb illicit behavior conducted through anonymous shell companies, Congress enacted the CTA on January 1, 2021, with a planned effective date of January 1, 2022.
Per the Act, the Secretary of the U.S. Department of Treasury, acting with the Financial Crimes Enforcement Network (FinCEN), was to issue final regulations by January 1, 2022, marking the effective date of the CTA.
However, that has not happened yet. On December 7, 2021, the Department of Treasury released a set of proposed regulations which could ultimately be implemented by the CTA when finalized.
The public is invited to comment on the regulations until February 7, 2022, which moves the effective date of the CTA further into 2022.
The CTA will require certain nonexempt entities created by secretary of state filings, defined as “reporting companies,” to file a report with FinCEN. The FinCEN report will require reporting companies to disclose the name, birth date, street address, and a unique “identifying number” for each “beneficial owner” and “applicant.”
Essentially, the CTA is attempting to collect information on company owners and the persons registering the companies.
Ensuring compliance with the CTA should be of the utmost importance for business owners because failure to comply will result in possible civil and criminal penalties depending on the business owner’s standard of conduct.
Though the final regulations are yet to be implemented, it appears that once they become effective, they will have broad implications on a great number of small businesses. To learn more about the upcoming CTA, contact Alex at [email protected] or by phone at 402-392-1250.