The Corporate Transparency Act
Don’t miss the deadline
The Corporate Transparency Act became effective on January 1, 2024. The legislation was designed to provide more insight into the ownership of corporate entities. According to the government, this would help to prevent money laundering, terrorism financing, and other similar financial crimes. For corporate entities, it can seem like more red tape. The most well-known requirement of the act demands that “beneficial owners” of the entity be identified. According to the act, a beneficial owner is any person that directly or indirectly has a significant ownership stake in a company.
Since its inception, the Corporate Transparency Act has faced constant backlash and legal scrutiny. These issues have led to constant confusion and uncertainty about how to respond to the act and whether or not entities should even comply with the current provisions of the Act while it is in the midst of litigation.
Currently the Act is being litigated in Eleventh Circuit Court of Appeals, among other places. It is possible that the Courts may uphold the constitutionality of the Corporate Transparency Act. It is also possible that the Courts will strike down the legislation as unconstitutional – either in whole or in part. One thing that is certain is that there are no assurances or guarantees as to what will the Courts will decide. Accordingly, it is vital that your company knows how to respond.
One thing that can be guaranteed is that if your entity was in existence as of January 1, 2024, you are still currently subject to a January 1, 2025, filing deadline. This deadline could be extended but there are no indications that such an extension is coming. However, your entity may be able to avoid filing if you are eligible for an exemption. If you are required to file a report, it is vital that you do so to avoid the potential fines and penalties that may be imposed upon you.
If you think this is a complex and confusing issue, you are not alone. Many companies are struggling to analyze the Corporate Transparency Act and its requirements. This issue may require your entity to consult with a lawyer to determine the best manner for your particular entity to act. If you have any questions regarding this issue, or any business law issue, and would like to further discuss these issues, please contact Alex Blackwell at 270-450-8253.