The Corporate Transparency Act (CTA) was enacted on January 1, 2021 and will go into effect on January 1, 2024

Why was it enacted - The CTA was enacted to detect and prevent money laundering and other illegal acts performed by certain business entities and their owners.

Who does it effect - Business entities that have less than 20 full time employees, reported no more than five million dollars in sales and have a physical office in the United States.

What does it require - That corporations, LLCs and similar entities report their Beneficial Owners names, addresses, dates of birth and identification numbers of any individual who directly or indirectly owns a 25% or greater interest in these entities or someone or some business entity that exercise substantial control of the business entity. They are considered Beneficial Owners (BOs) of an entity.

Compliance - Reporting companies that are in existence on the effective date must file their initial report within one year. New entities have 30 days from their creation to file their initial report. Entities have 30 days to report an additional BO or elimination of a BO or the change in any BO’s address. Penalties for the failure to register or report ownership changes are quite severe. The minimum is $500 and can increase to $10,000 per violation.

What to do - D&F contacted third party services that will have the ability to file the required reports with FINCEN but it will always be the business owners’ responsibility to inform the service that they will be using of any change in BO’s information. We will be sending out more information and instructions on what business owners need to do to comply with the CTA. 

Due to the complexity of the filing, we have been advised by the AICPA and our insurance carrier that we will be unable to submit the required reports. 

For more guidance, this is the link to the Small Entity Compliance Guide https://www.fincen.gov/boi/small-entity-compliance-guide.

Best regards,

Diapoules & Feinstein CPA's P.C.
Phone : 631-547-1040