Corporate Transparency Act (2023 considerations)

What’s coming next year but may be worth worrying about these last few days of 2023? No, it’s not your overambitious New Year’s resolutions, a Taylor Swift-Travis Kelce wedding, or the Presidential election. It’s the Corporate Transparency Act. Does it sound boring? Absolutely. Would you rather spend the next 5 minutes Christmas shopping instead of reading an attorney’s blog? Maybe. But do you want to spend two years in prison and pay thousands of dollars in fines and late fees? I doubt it.

The Corporate Transparency Act, or CTA, is intended to help combat money-laundering, terrorism, and organized crime by requiring companies to disclose their "beneficial owners" to the federal government.  Specifically, the CTA will require companies (with a few exceptions, most of which won't apply to any of our clients) to file a report with the US Treasury through an online system created by the Financial Crimes Enforcement Network (FinCEN).  There can be pretty severe civil and criminal penalties for failing to file, so if you own a business or a stake in a private business, you’ll need to talk with an attorney about your reporting requirements.  

These reporting requirements start in 2024, but they're worth noting now for a few reasons.

First, if you have an active company that you don't use (i.e., that's sitting dormant), you may want to dissolve it before the end of 2023 so that you don't need to file a report with FinCEN in 2024.  

Second, if you are thinking of forming a company, you may want to do so before the end of 2023. 

Why form a company now? Well companies that exist prior to 1/1/2024 have until 1/1/2025 to file their initial report, but companies that are formed on or after 1/1/2024 have 90 days from the date they are formed to file their initial report (companies formed on or after 1/1/2025 have 30 days to file their initial report).  So to buy yourself a bit more time to get your initial report in, you may want to form a company now.

Starting next year, when reports can be submitted (you can't file them, yet), we will assist clients with their CTA filing if the clients engage us to do so.  If you have any questions in the meantime, or want help forming or dissolving a company prior to the end of 2023, please let us know.