CONGRESS’ CORPORATE TRANSPARENCY ACT REQUIRES CERTAIN BUSINESS OWNERS TO REPORT PERSONAL INFORMATION OR FACE CIVIL AND/OR CRIMINAL PENALTIES

1/22/2024 | Articles & Alerts, General, News & Resources

The Corporate Transparency Act (the “Act”), which Congress enacted on January 1, 2021, and made effective as of January 1, 2024, establishes a beneficial ownership information reporting requirement as part of the Federal government’s efforts to enhance transparency in corporate ownership and prevent the utilization of shell entities or other ownership structures to facilitate money laundering, terrorism financing, and other unlawful activities. 

Unless your entity qualifies as one of the twenty-three types of entities exempt from the Act’s reporting requirements, beneficial owners (i.e., individuals who own or otherwise control the company) are required to report certain personal information, including full legal names, dates of birth, addresses, and driver’s license or passport numbers. Significantly, if a company has more than 20 full-time employees, gross receipts in excess of $5 million, and has a physical office in the U.S., it will be exempt from the filing requirement.

Of immediate importance, clients should be aware of the following reporting deadlines under the Act:

• For entities created prior to January 1, 2024, the required beneficial ownership information must be reported by January 1, 2025.
• For entities created on or after January 1, 2024, and before January 1, 2025, the required beneficial ownership information must be reported within 90 days after receipt of actual or public notice that such entity’s creation or registration is effective, whichever is earlier.
• For entities created on or after January 1, 2025, the required beneficial ownership information must be reported within 30 days after receipt of actual or public notice that such entity’s creation or registration is effective.

Failure to comply with the Act’s required reporting could result in severe civil and/or criminal penalties.

Kaplin Stewart is actively working to finalize a streamlined process to alleviate the burden that the Act, and its reporting requirements, imposes on our clients.

If you would like to schedule a time to discuss the Act in greater detail to determine how it may affect your business, please do not hesitate to contact us at 610-260-6000. We remain dedicated to providing complete guidance and support needed to swiftly and successfully navigate regulatory changes.

Related Practices: Real Estate Transactional, Business and Corporate Law