The Corporate Transparency Act (CTA) went into effect on January 1, 2024. This legislation mandates the creation of a comprehensive government database containing the identities and contact details of specified small corporations and LLCs “beneficial owners.” These beneficial owners are individuals who either own the entity or wield significant control over it. Law enforcement and security agencies will utilize this database to combat the misuse of shell companies for activities such as money laundering, tax evasion, and terrorism.
To adhere to this law, both new and existing small businesses are required to submit a Beneficial Ownership Information (BOI) report to the Financial Crimes Enforcement Network (FinCEN) under the Department of the Treasury. Entities established during 2024 subject to the CTA must file a BOI report within 90 days of formation, while those formed before 2024 have until December 31, 2024, to comply.
These reports are submitted electronically through a newly established federal database named BOSS (Beneficial Ownership Secure System), with no associated filing fee. It’s important to note that the information stored in the BOSS database is strictly confidential and intended for government agency use only—it will not be publicly disclosed.
In summary, the 2024 implementation of the CTA signifies a substantial shift in reporting obligations for small corporations and LLCs in the U.S., with a focus on combating financial crimes through enhanced transparency. It’s crucial for affected entities to understand and comply with these new requirements to avoid potential penalties.
Disclaimer: This is not legal advice, consult an attorney for legal advice or contact us.
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