Bad actors seek to conceal business ownership through shell companies to hide money laundering, securities fraud, terrorism, and trafficking. To counteract these illicit activities, Congress enacted the Corporate Transparency Act as part of the Anti-Money Laundering Act of 2000. Even if your business is not engaging in these activities, you may still be required to file a report under the Corporate Transparency Act.
The Corporate Transparency Act requires “reporting companies” to report beneficial ownership information with FinCen. FinCen maintains a national registry of these entities.
Most corporations, LLCs, and entities that submit documents to the Secretary of State must file a report. The required information from the Individual Beneficial Owner includes full name, date of birth, residential address, and identification number. Information about the company includes full legal name, address, state where the business was first registered, IRS taxpayer ID number, and EIN.
The act goes into effect on January 2024. The deadlines for reporting are as follows:
- Entities existing before January 1, 2024, must report by January 1, 2025.
- Entities created after January 1, 2024, must report within 90 days of filing with the Secretary of State.
- Entities created after January 1, 2025, must report within 30 days of filing with the Secretary of State.
- All entities subject to reporting must file subsequent reports upon any change to the required information within 30 days of the change.
There are 23 types of businesses that are exempt from reporting. Businesses such as banks, credit unions, insurance companies, and “large operating companies” are exempt. Large operating companies are defined as having more than 20 full-time employees in a physical office in the U.S. and have reported more than $5 million in gross receipts for the previous year.
Failure to report is punishable by a civil penalty of $591 for every day that it is late up to $10,000 and even imprisonment for up to 2 years. Therefore, Iowa business owners must consult an expert on these issues.
The attorneys at Simpson, Jensen, Abels, Fisher & Bouslog, P.C. are experienced in handling complex business issues. Contact us at at (515) 288-5000 to discuss your questions about the Corporate Transparancy Act
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