How To Prepare For The Corporate Transparency Act

As Connecting the Dots readers are aware, the federal Corporate Transparency Act (CTA) requires nearly every U.S. business to report, and to continuously update, information regarding their beneficial owners, and to face steep fines for failing to do so. (Specifically, the CTA includes civil and criminal penalties of up to $10,000 and two years of jail time for failing to report information about beneficial owners. These penalties could apply even in cases that amount to nothing more than a paperwork violation.)

Reporting companies created before January 1, 2024 must file their initial report by January 1, 2025.

While oral arguments in a federal case challenging the constitutionality of the CTA will be heard on September 23, 2024, and the Metals Service Center Institute (MSCI) and allies in the business community will continue to ask Congress to delay CTA implementation, it is time for companies to prepare. As such, the S Corp Association has compiled a fact sheet that will help firms navigate the CTA’s compliance regime. That document is available here.

Meanwhile, MSCI will continue to try to prevent the CTA from going into effect. Why? According to the S-Corp Association, the federal government “has significantly underestimated the cost burdens associated with the new reporting regime, it has relied on vague and arbitrary standards in laying out the criminal and civil penalties under the statute, and it has implemented filing deadlines for newly-formed entities which, in some cases, are impossible to meet.”

Stay tuned to Connect the Dots for updates.