What Every Small Business Needs to Know About the Corporate Transparency Act
The Corporate Transparency Act is back on hold as of December 26, 2024. Stay on top of the updates, here.
Editor's Note: 12/27/24: On December 26, 2024, the U.S. Court of Appeals for the Fifth Circuit paused the enforcement of the Corporate Transparency Act (CTA), thus pausing the beneficial ownership reporting requirements for U.S. small business owners. This reverses the earlier decision from December 23, 2024, to reinstate the CTA and its reporting requirements. The CTA remains on hold for now while under review. We will keep you updated as further developments unfold.
Under the Corporate Transparency Act (CTA), which went into effect on January 1, 2024, many U.S. small business owners are required to file corporate transparency reports with beneficial ownership information.
For most eligible businesses, the filing deadline is January 13, 2025. Those who fail to file by this deadline — or fail to update this information if needed — could face up to two years imprisonment and fines up to $10,000, in addition to civil penalties of up to $591 per day.
[Download our full guide on how to file your Beneficial Ownership Information Report]
What is the Corporate Transparency Act?
The CTA was enacted in 2021 to combat illicit activity including tax fraud, money laundering, and financing for terrorism by capturing more ownership information for specific U.S. businesses operating in or accessing the country’s market. Under the new legislation, businesses that meet certain criteria must submit a Beneficial Ownership Information (BOI) Report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). This report provides details identifying individuals who are associated with the reporting company.
The CTA was established to prevent individuals with malicious intent from hiding or benefitting from the ownership of their U.S. entities to facilitate illegal operations which, according to Congress, is a widely-used tactic that affects national security and economic integrity.
https://www.uschamber.com/co/start/strategy/small-business-corporate-transparency-act