CTA LEGAL ALERT – ACTION MAY BE REQUIRED
The Corporate Transparency Act (“CTA”) became effective January 1, 2024, and requires that all businesses formed or registered to do business by means of filing with the Secretary of State (“Reporting Company”) must disclose to the U.S. Department of the Treasury, Financial Crimes Enforcement Network (“FinCEN”), information about the Reporting Company, its beneficial owners, and in some cases, the company applicant (“BOI Report”). Beneficial owners are those individuals, trusts, or other entities that either (1) own at least 25% of the equity in the Reporting Company, or (2) exercise substantial control over the Reporting Company (e.g., hiring and firing, an officer of a corporation, etc.). If ownership interests in a Reporting Company are held by a Revocable Living Trust or an Employee Stock Ownership Plan (“ESOP”), the trustees are under a duty to report as a beneficial owner (however, most ESOPs will qualify for the exemption from filing as described in the next paragraph).
Numerous exemptions exist that relieve certain businesses from a duty to report, the most pertinent of which is that Reporting Companies with more than twenty (20) employees which also filed a federal income tax return in the previous year showing more than $5,000,000.00 in gross receipts or sales are not required to report under the CTA. A willful failure to report can result in a civil penalty of up to $500 per day and possible criminal penalties of up to a $10,000 fine and up to two years in prison.
To comply with the CTA, Reporting Companies must file the BOI Report on or before January 1, 2025, if created prior to January 1, 2024, and within ninety (90) days from the creation date for all Reporting Companies created after January 1, 2024.
Please review the posted FAQs which can be located at https://www.eagleandfein.com/resource-center/CTA. For more detailed information regarding your obligations under the CTA and other exemptions to reporting, please visit https://www.fincen.gov/boi/small-entity-compliance-guide to review the FinCEN Small Entity Compliance Guide.
If you would like Eagle & Fein, P.C. to file the BOI Report for you, please contact Katie Delks at KDelks@eagleandfein.com