The Corporate Transparency Act (CTA) is a new piece of legislation aimed at enhancing transparency in business ownership and cracking down on illicit activities like money laundering, tax evasion, and financing of terrorism. As an attorney with the American College of Trust and Estate Counsel (ACTEC), I have seen how this act is impacting estate and business planning, especially small businesses, trusts, and estates. In this blog, I will break down the key elements of the CTA and how it affects business owners, fiduciaries, and professionals in the legal field.
Watch this great video that ACTEC put together on the Corporate Transparency Act.
Many small and closely held businesses are required to comply with the CTA, including limited liability companies, corporations, and other similar entities registered in the United States. Some entities, such as large companies (specifically defined), publicly traded companies, dormant entities (specifically defined), and certain regulated entities like banks, are exempt. The reporting requirement applies to both new and existing companies.
Trusts, estate planning structures, and other non-traditional business entities are areas where ACTEC attorneys, like myself, focus much of our attention. While trusts themselves are not directly subject to the CTA, trustees, beneficiaries, or other persons associated with a trust may be considered beneficial owners of an entity that is subject to reporting. This raises nuanced questions about how trust ownership impacts compliance, and it’s an area where expert legal guidance is invaluable.
The CTA requires entities to report key information about their beneficial owners, including:
Failure to comply with the CTA can result in severe penalties, including civil penalties of up to $500 per day and criminal fines of up to $10,000, as well as potential imprisonment.
Navigating the complexities of the CTA can be daunting, especially for small business owners and those involved in the owners’ trust and estate planning. At Sandin Law, we are uniquely positioned to offer insight and guidance on how the CTA affects our client’s businesses, especially those owned by trusts. We encourage our clients to stay informed about updates and guidance from FinCEN regarding the implementation of the CTA. Our deep expertise in fiduciary law and corporate governance allows us to help our clients remain compliant, avoid penalties, and maintain the integrity of their businesses.
The Corporate Transparency Act represents a major shift in corporate governance and reporting requirements. As ACTEC attorneys, we are committed to helping our clients understand and comply with these new rules and ensuring the continued success of their businesses.
For a more detailed discussion on the Corporate Transparency Act, I encourage you to watch the accompanying video from ACTEC, which delves into the nuances of this legislation and how it impacts estate planning, trusts, and businesses.
