THE SUMMER KNOWS – THE CORPORATE TRANSPARENCY ACT IS HERE AND YOU’RE NOT READY

One last caress

It’s time to dress

For Fall

“The Summer Knows” (Summer of ’42 Main Theme) Music by Michel Legrand;

Lyrics by Marilyn and Alan Bergman 1972

 I have always used the last two weeks in August as a time to reflect on all the things I need to accomplish before the end of the year. Maybe it’s because as a kid, Labor Day really meant the day before the start of school. Maybe it’s because of all those Summers spent at the Jersey Shore basking in the Dog Days of August, but knowing that the long shadows cast by the sun shining on the telephone poles as I walked home from the beach were an indication that the falling leaves of Autumn were not far behind. Maybe it’s because of my love of all of the timeless songs in the Great American Songbook that deal with the innocence of Summer giving way to the realities of Autumn and the harshness of Winter. Whatever the reason, this is my time of the year to plan.

Whether or not you’re a Dog Days of Summer planner like me, if you are a small business owner, I suggest you add one item now to your “right after Labor Day To Do List” – fulfilling your obligations under the Corporate Transparency Act (CTA) by filing certain “Beneficial Owner Information” (a “BOI”) regarding your corporate entity with the Financial Crimes Enforcement Network (FinCEN), a bureau within the U.S. Department of Treasury. 

The CTA requires corporations, limited liability companies, and other similar business entities to disclose the “Beneficial Owners” of the entity to the FinCEN.  A Beneficial Owner is an individual who, directly or indirectly, either exercises “Substantial Control” over the business entity (as defined under the CTA), or owns or controls not less than 25% of the ownership interests of the business entity. As such, senior officers or board members of a corporation or managers of a limited liability company are likely Beneficial Owners even if they hold less than 25% of the ownership interests, or have no ownership interest at all. Each Beneficial Owner is required to provide to FinCEN as part of the BOI their full legal name, date of birth, current address, and a copy of an acceptable government identification document such as a driver’s license.

There has not been much media coverage of this pending end-of-year deadline to date, and I expect there will not be until after this year’s national elections. At that time, as the days grow short and the sky turns gray, you will likely begin hearing a lot more about the precious weeks left to meet this obligation and the severe penalties for not doing so. That is unfortunate because the penalties for failing to file are severe; $500 for each day of non-compliance up to $10,000 per violation – and possible imprisonment of up to two years. Also, expect that beginning in 2025 your bank may require evidence of a BOI filing as a condition to make a loan or open an account, and your certified public accountant may require evidence of a BOI filing as a condition of filing your corporate tax return.

Before you return to your Summer fun, take this opportunity to contact us and schedule a time to address this critical issue now, before “the Autumn leaves start to fall” (“Autumn Leaves” – Music by Joseph Kosma; French Lyrics by Jacques Prévert; English Lyrics by Johnny Mercer 1945)