Are You Ready for the Corporate Transparency Act?

CTA, taking effect on Jan. 1, requires many businesses to file with the Financial Crimes Enforcement Network (FinCEN). Filing requirements and privacy issues are raising eyebrows.

A small-business owner looks serious as she works on her computer at her desk.
(Image credit: Getty Images)

On Jan. 1, 2024, the Corporate Transparency Act (CTA) becomes effective. Every new corporation, limited liability company (LLC), limited partnership and any entity whose existence is created by a filing with a Secretary of State in any state must file with the Financial Crimes Enforcement Network (FinCEN). More than 32 million entities are estimated to be affected.

This filing will require the business name, current address, state of formation and tax identification number for the entity. The filing will also require the name, birth date, address and a copy of a government-issued photo ID such as a driver’s license or passport of every direct and indirect owner. Each of the 32 million or more entities will almost certainly involve a filing by more than one person. The inclusion of this information for indirect owners creates both complexity and a very broad range of who qualifies as an indirect owner requiring filing of individual otherwise personal information. Penalties for failure to comply are high — $500 a day up to $10,000 and up to two years in jail (per occurrence).

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John M. Goralka
Founder, The Goralka Law Firm

Founder of The Goralka Law Firm, John M. Goralka assists business owners, real estate owners and successful families to achieve their enlightened dreams by better protecting their assets, minimizing income and estate tax and resolving messes and transitions to preserve, protect and enhance their legacy. John is one of few California attorneys certified as a Specialist by the State Bar of California Board of Legal Specialization in both Taxation and Estate Planning, Trust and Probate.