Myth #1: The Corporate Transparency Act applies only to big businesses.
A reporting company (an entity that is required to submit certain information to the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN)) is a corporation, limited liability company (LLC), or other similar entity that was created by filing a document with the secretary of state or a similar office under the laws of a state, Indian tribe, or a foreign country that is registered to do business within the United States.
Many business regulations apply only to large businesses, but the CTA specifically targets smaller entities. If you own a small business entity such as an LLC or family limited partnership you may be subject to this act unless your business falls within one of the stated exemptions, which are primarily applicable to industries that are already heavily regulated. Your business may also be exempt if it employs more than 20 full-time employees, filed a return showing more than $5 million in gross receipts or sales, and has a physical office in the United States.
Myth #2: The information in the filings will be a matter of public record
At present, FinCEN intends to collect the information and maintain the database for use by multiple government agencies. The information is deemed confidential, and FinCEN can only disclose the information upon receiving a valid request from certain state or federal agencies. Those who engage in the unauthorized disclosure of this information may be subject to penalties.
Question #1: What is the penalty if I do not comply with the Corporate Transparency Act?
According to the CTA, willful failure to comply or provide false or fraudulent information can result in a penalty of up to $500 per day, with a maximum penalty of $10,000 or imprisonment for up to two years, or both.
Question #2: What do I need to do if I move, and how long do I have?
If you are deemed a beneficial owner of a reporting company, you must submit an updated report that includes your new address within 30 days of the change. A benefit who changes their name must also submit an updated report within 30 days of the change.