Client Alert: IMPORTANT: New Registration Requirements for 2024 under the Corporate Transparency Act
As part of Cairncross & Hempelmann’s ongoing commitment to keeping you informed, we want to draw your attention to critical incoming changes impacting businesses and their owners in the coming year. Your compliance with these changes in 2024 is imperative and we encourage you to take a moment to review the content carefully. Do not hesitate to contact us if you have any questions. Your success is our priority, and we are here to assist you every step of the way.
The Corporate Transparency Act
On January 1, 2024, the federal Corporate Transparency Act (the “CTA“) will introduce new registration requirements for entities doing business in the United States. Passed as an effort to stifle money-laundering activities, the CTA will expand the amount of information about businesses and their owners that must be disclosed to the federal government.
The CTA’s new registration requirements apply to almost all entities formed in or operating in the United States, including LLCs, partnerships, corporations, and any other associates formed by a state filing.
Representatives of these business entities will be required to not only submit information about their companies (such as their EINs), but also submit personal information about the company’s “Beneficial Owners.” In general, “Beneficial Owners” are the direct or indirect owners of 25% or more of the equity of a business entity. Individuals who “control” the entities such as officers, directors, managers, or general partners are included in the CTA’s definition of Beneficial Owners as well.
The CTA requires that all of a company’s Beneficial Owners submit their names, birthdates, addresses, and an identification document (such as a passport) to the Department of Treasury’s Financial Crimes Enforcement Network.
The deadline for registering existing entities is December 31, 2024. Entities that are formed after January 1, 2024, will need to be registered within 90 days after formation. In 2025, newly formed entities will need to be registered within 30 days.
Penalties for Failing to Register
The new act contains severe penalties for failure to register including civil penalties of up to $500 per day of violation as well as criminal penalties of a $10,000 fine and/or up to two years of imprisonment.
We’re Here to Help!
First and foremost, CH& is ready, willing, and able to assist our clients in complying with these new legal requirements whether they are forming a new entity or must register an existing one. We have engaged with Thompson Reuters to provide software support in order to comply with registration procedures while maintaining the privacy of personal information.
We will be reaching out to all our clients in the near future to start working through compliance issues and exploring potential exemptions for these new requirements as well. In the meantime, we recommend that existing entities wait until later in the year before filing as the registration system smooths out its processes and provides updated guidance.
For more information, please contact: CTA Compliance Team at firstname.lastname@example.org.