New Compliance Law Impact: Corporate Transparency Act

On January 1, 2024, the Corporate Transparency Act (“CTA”) took effect and is estimated to impact over 30 million businesses. The CTA, aimed to fight against fraud, requires businesses (with limited exceptions) to file a Beneficial Ownership Information (BOI) report with the Financial Crimes Enforcement Network (FinCEN), which is a bureau of the U.S. Department of the Treasury. Compliance with this new legislation is crucial to avoid unnecessary penalties and legal complications.

 

Who does the CTA impact?

Businesses that have more than 20 full-time employees AND grossed more than $5 million in 2023 will be exempt from filing. There is also a small selection of industries (corporations with their own regulatory bodies such as the SEC) exempt from the filing requirement.

Companies subject to the CTA are listed below and must file a BOI report with FinCEN.

• Corporations
• Limited Liability Companies
• Similar entities that file with a Secretary of State or similar state offices 

When is the BOI filing deadline?

• All businesses created before January 1, 2024, must file by January 1, 2025.
• Companies started on and after January 1, 2024, must file within 90 days of creation.
• Any company created after January 1, 2025, must file within 30 days of creation. 

What are the penalties for companies subject to the CTA that do not file?

Any person or company who provides false information or fails to comply with the CTA may receive a $500 civil penalty for each day the violation continues, and criminal penalties, such as imprisonment, for up to two years and a fine up to $10,000.

 

Actions Steps for Employers

Employers should first determine if they are impacted by the CTA, and therefore required to file a BOI report.

If it is determined a company is required to file a BOI, they can:

• File on their own through https://www.fincen.gov/boi
• Work with North Risk Partners’ HR partners at Wagner, Falconer & Judd to file on their behalf.
• Seek other consult.