Congress enacted the Corporate Transparency Act on January 1, 2021. Its purpose is to fight the use of LLCs and Corporations to launder money and conceal the proceeds of illegal ventures. Its effect will be to burden every small business corporation and LLC in the nation.
The Act goes into effect on January 1, 2024 and requires every existing or new corporation or LLC to file with the Federal Financial Crimes Enforcement Network the following information:
The business name, address, state of formation and its EIN.
The name, address, birth date, and government issued photo ID for every direct or indirect beneficial owner of the business. This information must be updated when changes occur.
There are substantial penalties for failure to comply–$500.00 per day up to $10,000 per day and up to 2 years in jail.
It is clear that the Act is directed at small businesses. Exempt from the reporting requirements are regulated companies such as banks, businesses with more than 20 employees and more than $5,000,000.00 in annual revenue and companies that are inactive in any trade or business.
It is presently unclear as to how this will work or where in the Federal Financial Crimes Enforcement Network this information must be sent. We have searched and no reporting forms with instructions are yet available.