Navigating the New Era of Corporate Transparency: What You Need to Know About the Corporate Transparency Act

 

The Corporate Transparency Act (CTA) was enacted in 2021 and is now in effect as of January 1, 2024. It is part of Congress’ ongoing efforts to fight money laundering, financing of terrorism, tax fraud, and other illegal acts. So, what does this mean for you?

Though the target is bad actors and not our clients (assuming you are not laundering money, funding terrorists, or engaging in other such acts!), the tactics used to achieve the goals of the CTA impact most business owners and those who control business interests.

A Closer Look at the Corporate Transparency Act: What It Means for Your Business

The CTA aims to enhance corporate transparency by requiring most companies to disclose information about their “beneficial owners.” These are the individuals who, directly or indirectly, control or own a significant interest in a company.

This includes the company’s:

  • full legal name
  • current address
  • jurisdiction, and
  • tax ID.

And, the owner’s:

  • name,
  • date of birth,
  • address,
  • official ID.

Essentially, they want to know who owns or controls the business and how to get in touch with them. In essence, the Corporate Transparency Act seeks to map the face of corporate ownership.

Timelines to Keep in Mind

Depending on when your business was established, the clock for compliance is ticking:

  • Pre-2024 Companies: If the company was formed in 2023 or before, you must file the required information by the end of the year.
  • Companies Formed in 2024: If the entity was created during 2024, you have 90 days from notice of formation.
  • Post-2024 Entities: If the business is created after January 1, 2025, you have 30 days after notice of formation.

Keeping Up with the Evolving Landscape of the Corporate Transparency Act

Staying informed is critical as things evolve around the Corporate Transparency Act. The Treasury’s Financial Crimes Enforcement Network webpage and Virginia’s State Corporation Commissions webpage will be valuable sources of information. However, nothing beats personalized guidance, so it would be ideal to engage with your corporate counsel or tax professional as we move forward.

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