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Transparency Fines: $500/Day & Jail!

Transparency Fines: $500/Day & Jail! - modern home man signing paperwork, new home in background
/20 Jul 2023
/By admin

Commercial Litigation Lawyer

FAILING TO COMPLY WITH THE CORPORATE TRANSPARENCY ACT CAN COST YOU…UP TO $500 PER DAY AND PRISON TIME.

For the millions of small business owners around the country, one more item has been added to their to-do list—mandatory filings to the Financial Crimes Enforcement Network.  On January 1, 2021, the United State Congress enacted the Corporate Transparency Act, with a goal of detecting and reducing money laundering, fraud, and other misconduct through a business. The experienced commercial litigation lawyer from Silverman Law Office, PLLC explains that as part of the legislation, almost all entities are required to file a report of their owners and operators.

Although Congress has not completed its final regulations or provided a copy of the required report, there is important information you should know about the act. 

WHAT EVERY BUSINESS OWNER SHOULD KNOW ABOUT THE CORPORATE TRANSPARENCY ACT. 

WHO HAS TO FILE THE REPORT

Unless an exemption applies, any entity that incorporates under the Montana secretary of state or similar office in another state must file the report. Unfortunately, there is no exemption for single-member LLCs and family businesses.

WHO ARE THE BENEFICIAL OWNERS

The Corporate Transparency Act requires entities to report their beneficial owners, which includes. anyone who exercises either direct or indirect control over a company or who owns or controls ¼ of the ownership interest. In other words, information for all individuals who own stock or membership interests or act on the board or as a senior officer must be reported.

WHAT MUST BE INCLUDED IN THE REPORT

Entities must report the following information about all their beneficial owners:  

  • Full legal name
  • Date of birth
  • Current residential or business address
  • Unique identifying number (For the first report, this will be the tax identification number of the business or sole proprietor. For future filings, each business will be assigned a number by the Financial Crimes Enforcement Network.)

For businesses created after January 1, 2024, the reports must include the same information for the “Company Applicant,” the person who files the application paperwork with the secretary of state.

WHEN IS THE FILING DEADLINE

If the entity was created before January 1, 2024, the deadline to file the report is January 1, 2025. For all businesses created on or after January 1, 2024, the company has 30 days to file the report.

WHAT HAPPENS IF YOU DON’T FILE

Any person that fails to comply with the filing requirements is subject to a fine of $500 per day and prison time of up to two years. 

NOTE: CONGRESS HAS NOT PROVIDED ALL THE DETAILS ABOUT THIS NEW FILING REQUIREMENT. BE ON THE LOOKOUT FOR MORE INFORMATION AND FOLLOW US ON SOCIAL MEDIA TO STAY INFORMED.