Navigating the

Corporate Transparency Act

with HighPoint CPAs

POSTED ON January 19, 2024 by HighPoint CPAs

Now that we've reached the effective date of the Corporate Transparency Act (CTA) on January 1, 2024, HighPoint CPAs is dedicated to ensuring you stay informed and ready. This recent regulation, integrated into the 2021 National Defense Authorization Act, modifies the Bank Secrecy Act with the aim of addressing issues related to money laundering and illicit activities. FinCEN projects that about 32.6 million businesses will be required to comply with these regulations in the first year.

Entities registered with a secretary of state, like corporations and LLCs, must disclose beneficial ownership details. This involves individuals holding at least 25% ownership or exerting significant control over the company. Any company that meets the definition of a reporting company and is not exempt is required to file its own BOI report. Trusts exercising substantial control or owning 25% or more of a reporting company may also be categorized as reporting entities. Not-for-profit companies are excluded from the beneficial ownership disclosure requirements. If you have further inquiries or need clarification, feel free to contact us.

- Companies established before December 31, 2023, must file initial reports by January 1, 2025.

- Companies registered after January 1, 2024 have 90 days post-registration to file.

- Companies registered after January 1, 2025 have 30 days post-registration to file.

- Reporting companies are required to file updated reports within 30 days of any changes.

Entities:

- Full entity name and any DBA name, if applicable

- Entity's physical address in the United States

- Entity's Tax ID number

Beneficial Owners:

- Full legal name

- Date of Birth

- Address (residential if individual)

- Proof of identification (current/valid driver's license or passport)

In cases where maintaining confidentiality is crucial and you wish to prevent third parties from accessing the above information, an alternative option is to generate a FinCEN Identifier. This identifier is a distinctive number issued by FinCEN upon request for individuals or reporting companies. While the required information remains the same, the key distinction is that it will be submitted directly to FinCEN, bypassing the scrutiny of third-party individuals. The third-party individuals will only see the FinCEN identifier instead of the sensitive information listed above.

Non-compliance can lead to fines and imprisonment. A $500 per day penalty, up to $10,000 and imprisonment of up to two years are possible for failing to file timely reports. Unauthorized disclosure or use of this information can result in a $500 per day penalty, up to $250,000, and up for five years in prison.

We are closely observing the developments and will provide guidance on the requirements of the CTA. Our services are available to support all entities in achieving compliance with the CTA, although individuals can also handle it independently if they choose to do so.

Exercise caution regarding fraudulent activities and scams that may exploit the new law. Ensure to authenticate any requests for sensitive information and remain vigilant against fake registration services and websites. Refrain from providing sensitive information to any fraudulent or suspicious pop-up entities, websites, etc., that claim to offer assistance with the CTA.

We understand the complexities of new regulations like the CTA. HighPoint CPAs is here to support you with financial advice and to help navigate these changes. Please reach out to us for any assistance of clarification. You can also find FAQs regarding the CTA here.

Thank you,

The Team at HighPoint CPAs