Corporate Transparency Reporting

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corporate transparency reporting

nesses have a multitude of legal and regulatory obligations to keep track of. One increasingly important area is corporate transparency reporting, mandated by the Corporate Transparency Act (CTA).

Enacted as part of the Anti-Money Laundering Act of 2020, its primary aim is to combat financial crimes such as money laundering, terrorist financing, and tax fraud. These illicit activities often involve the use of shell companies to hide the true owners (beneficial owners) of assets and funds. The CTA seeks to prevent this by requiring companies to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN)

If you are unsure of what this means for your business, our Chicago business lawyers at Anthony J. Madonia & Associates, Ltd. are here to guide you.

Is Corporate Transparency Reporting Only for Corporations?

Despite the name, the Corporate Transparency Act applies to a wider range of entities, not just corporations. Here’s the key point to remember:

  • Required to Report: Corporations, not-for-profit corporations, limited liability companies (LLCs), limited partnerships (LPs), and limited liability partnerships (LLPs).
  • Exempt From Reporting: Sole proprietorships, general partnerships, and trusts – as these entities do not register with the Illinois Secretary of State.

While the name suggests otherwise, the Corporate Transparency Act covers more than just traditional corporations. Businesses should be aware that LLCs, LPs, LLPs, and not-for-profit corporations are all subject to reporting requirements.

What Information Should the Report Include?

Each reporting company must file a Beneficial Ownership Information (BOI) report. This report must include the following information about each beneficial owner of the company:

  • Company/Business Information: This includes the legal name of the reporting company, any trade names or “doing business as” names, business street address, jurisdiction of formation, and Taxpayer Identification Number (TIN).
  • Beneficial Owner Information: This includes full legal name, date of birth, current residential street address, identifying number from an acceptable form of identification (passport, driver’s license, or other government-issued ID), and a clear image of the document used for the identifying number
  • Company Applicant Information: Only required for new businesses formed on or after January 1, 2024. This includes full legal name, date of birth, current business street address, and an identifying number from an acceptable form of identification (similar to beneficial owner).

Corporate transparency reports require detailed disclosures. The extensive information required helps authorities track down the true individuals behind companies, making it harder to hide illicit funds or activities.

When Should the Reporting Company Comply?

FinCEN began accepting reports on January 1, 2024. The deadlines for filing your initial BOI report depend on when your business was formed:
•If your company was created or registered prior to January 1, 2024, you will have until January 1, 2025 to report BOI.
•A company created or registered in 2024 must report BOI within 90 calendar days after receiving actual or public notice that your company’s creation or registration is effective, whichever is earlier.
•If your company is created or registered on or after January 1, 2025, you must file BOI within 30 calendar days after receiving actual or public notice that its creation or registration is effective.
•Any updates or corrections to beneficial ownership information that you previously filed with FinCEN must be submitted within 30 days.

Reporting companies must also file updated reports if there are changes to their beneficial ownership information.

What Happens if a Reporting Company Fails to Comply?

Failing to file the BOI report, filing an inaccurate report, or intentionally providing false information can result in severe civil and criminal penalties. The seriousness of these penalties underscores the importance of complying with the CTA.

For instance, companies that fail to comply can face civil penalties of up to $500 per day of violation. These fines can quickly become substantial if the non-compliance persists over an extended period.

Moreover, willful violations of the CTA, such as intentionally providing false information or knowingly failing to report, can carry criminal penalties. This could include fines of up to $10,000 and imprisonment for up to 2 years.

Schedule a Consultation With Our Chicago Business Lawyer – Let Us Help You!

Navigating the requirements of the CTA can be confusing. If you have any questions about whether your business must report and how to file the BOI report correctly, please do not hesitate to seek legal counsel. Our experienced Chicago business lawyers at Anthony J. Madonia & Associates, Ltd. are here to help you ensure your business stays in compliance.