Understanding the Corporate Transparency Act: What You Need to Know

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The Corporate Transparency Act (CTA), enacted by Congress in January 2021, represents a significant step in the fight against money laundering and other illicit activities. This landmark legislation requires U.S. companies to disclose information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a division of the Treasury Department. Here’s a closer look at the CTA and what it means for your business.

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What Is the Corporate Transparency Act?

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The CTA’s primary objective is to enhance transparency and accountability in corporate governance by mandating that companies report the identities of individuals who own or control them. This measure aims to curb illegal activities such as money laundering, fraud, and the financing of terrorism by making it harder for entities to hide behind anonymous shell companies.

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Key Reporting Details-

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The CTA introduces two main categories for reporting:

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1. Domestic Reporting Companies: This includes any corporation, LLC, or entity formed by filing with a U.S. Secretary of State or similar office.

2. Foreign Reporting Companies: These are entities created in a foreign country but registered to do business in the U.S. through filings with the Secretary of State or equivalent office.

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Exemptions from Filing

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There are 23 exemptions under the CTA, which means not all companies are required to file a Beneficial Ownership Information (BOI) report. Exemptions include:

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- Publicly Traded Companies: These companies are already subject to rigorous disclosure requirements.

- Regulated Entities: This includes insurance companies, broker-dealers, and other entities already regulated by federal or state agencies.

- Large Operating Companies: Companies meeting all of the following criteria are exempt:

  - Have 20 or more full-time employees in the U.S.

  - Filed an income tax return in the previous year with at least $5 million in gross receipts or sales.

  - Maintain an operating presence or physical office within the U.S.

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Filing Deadlines

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The CTA outlines specific deadlines for compliance:

1. For Companies Created Before January 1, 2024: Reports must be filed by January 1, 2025.

2. For Companies Created On or After January 1, 2024: Reports must be filed within 30 calendar days of receiving notice of their registration or creation.

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Penalties for Non-Compliance

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Failure to comply with CTA requirements can result in significant penalties:

- $500 per day civil penalty

- $10,000 fine or up to 2 years in prison

- 90-day Safe Harbor period for initial non-compliance

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How Techworks Can Help

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Navigating the complexities of the CTA can be challenging. That’s where Techworks comes in. Our comprehensive solution, CTAComply™, is designed to streamline your compliance process. As a leading platform in compliance management, CTAComply™ helps you manage Beneficial Ownership Information (BOI) efficiently, ensuring you meet all CTA obligations with ease.

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Ready to ensure your business is CTA compliant? Reach out to Techworks today to learn more about how CTAComply™ can simplify your reporting requirements and safeguard your business from penalties. Contact us now to get started!

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At Techworks, we’re here to support your compliance journey every step of the way. If you have any questions or need assistance, don’t hesitate to get in touch. Let us help you navigate the complexities of the Corporate Transparency Act with confidence.

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