Corporate Transparency Act Reporting Requirements Are Coming

December 1, 2023

Congress’s new Corporate Transparency Act (CTA) goes into effect on January 1, 2024, and will impact most Maine businesses.  Here is what you need to know now.

What is it?  The CTA is a federal law designed to combat money laundering.  Every business entity, with very few exceptions, will be required to provide to the Treasury Department’s Financial Crimes Enforcement Network (FinCen) information about its “Beneficial Owners.”  The term “Beneficial Owner” has a very broad definition, but in short, includes anyone who (1) exercises substantial control over the company or (2) owns or controls at least 25 percent of a company.

What Information Must Be Provided?  “Beneficial Owners” of a company must report to FinCen (1) their full legal name, (2) their date of birth, (3) the current street address of their primary residence, (3) the identifying number from their license, passport, or other state or local identification, and (4) a clear image of that same non-expired identification document (license, passport, etc.).  The CTA requires that this information is updated within 30 days of any change.  The government database storing this information will not be accessible to the public.

Deadline to Provide Information?  Existing companies will have until the end of 2024 to comply with the CTA.  However, new companies formed beginning on January 1, 2024, will have 90 days from the date of the company’s receipt of actual or public notice of its registration with the Secretary of State to comply with the CTA.  Companies formed beginning on January 1, 2025, will have 30 days from the date of the company’s receipt of actual or public notice of its registration with the Secretary of State to comply with the CTA.

Who Does It Impact?  While there are several exceptions, the CTA applies to corporations, LLCs, limited partnerships, nonprofits, etc. 

Penalties for Noncompliance?  Penalties for failing to comply include civil penalties of up to $500 per day that the violation continues, and criminal penalties of up to $10,000 and/or incarceration for up to two years. 

What’s Next?  The FinCen website is not currently up and running and the required information cannot be provided to FinCen until 2024.  If Jensen Baird serves as your registered agent or clerk, you will receive information regarding the CTA with your annual report mailing in late winter/early spring of 2024.  The packet will include information about what you need to do to ensure your company is compliant with the CTA and how Jensen Baird can help.

Want More Information?  Contact us below, or visit FinCen’s Small Entity Compliance Guide. 

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