CLIENT ALERT – The Corporate Transparency Act and What It Means For You

There is a significant piece of new law on the books effective January 1, 2024 that will impact all business owners, including many Bulman Dunie estate planning clients. Anecdotally, from talking to our clients who will be impacted by this change, most are not aware of this new law. The Corporate Transparency Act (the “CTA”) will be effective on January 1, 2024.

What Must Be Reported?

All “domestic reporting companies” must file a report with the United States Department of Treasury through a database that will be established and administered by the Financial Crimes Enforcement Network (“FinCEN”). Under the regulations as they presently stand, domestic reporting companies will be required to file information about the company itself, and the individuals who own or control the company (known as the “Beneficial Owners”).

Who Is Required to File a Report?

Do you own an investment property in a limited liability company? Did you establish a “family limited liability company” for gifting purposes? Do you have a consulting job and use a limited liability company to enter into contracts and maintain your consulting business? If the answer to any of those questions is “yes”, then you are almost certainly subject to the CTA. A “domestic reporting company” that must file a report with FinCEN includes any entity that was created by filing a document with a secretary of state.  This includes essentially any and all corporations, limited liability companies, limited liability partnerships, and other business entities.

When Will I Be Required to Report?

If your domestic reporting company is in existence prior to January 1, 2024, you will have one year to file your initial report with FinCEN. Going forward, for individuals who form a domestic reporting company after January 1, 2024, the company must file its initial report within 30 days. There is the possibility this deadline will be extended to 90 days if certain amendments to the CTA under consideration are passed. Going forward, any time a domestic reporting company has changes in beneficial owners, an update will need to be filed with FinCEN. There will be no fee for filing a report with FinCEN.

What If I Don’t Report?

The willful failure to timely report could be expensive to the tune of civil fines of $500/day, up to $10,000.00.  The law also carries potential imprisonment for a willful failure to comply.

Where Can I Get More Information?

If you would like more information about compliance with the CTA and to receive answers to frequently asked questions, visit the FinCEN “Small Business Resource” page by clicking here.