Business entities should begin preparing now to ensure compliance.
Wolters Kluwer CT Corporation published new thought leadership outlining reporting obligations under the pending U.S. Corporate Transparency Act (CTA), scheduled to take effect on January 1, 2024. Written by Sandra Feldman, Publications Attorney at Wolters Kluwer CT Corporation, the article reviews exemptions to the CTA’s Beneficial Ownership Information (BOI) reporting mandates and has been included in the most recent edition of The National Association of Secretaries of State’s (NASS) monthly business services news clips roundup.
Feldman is responsible for tracking the most pressing and pertinent business entity law issues that impact CT customers of all sizes and industries. She continues to make significant contributions to CT Corporation’s extensive portfolio of informational resources devoted to breaking down key components of the CTA.
Founded in 1904, NASS is the oldest non-partisan professional organization for public officials in the U.S. The organization was established to promote a collaborative approach to the development of public policy and serve as a conduit for states to exchange information.
Below, Feldman provides additional insights into the potential business impact of the CTA:
The Corporate Transparency Act (CTA) is the most significant piece of federal legislation affecting businesses since the U.S. Securities Laws were in enacted in the 1930s. It requires every corporation, LLC, or other entity formed by the filing of a document with a state or created under the laws of a foreign country and registered to do business in a state (unless otherwise exempt), to file an initial Beneficial Ownership Information report with the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). Business entities or individuals that violate the act can expect harsh civil or criminal penalties.
The impact is poised to be significant: by FinCEN’s own estimation, 32.6 million entities will be required to file a report in the first year, with 5 million more having to file each year thereafter. FinCEN further estimates that about 6.6 million updated reports would be filed in the first year and 14.5 million updates would be filed annually thereafter. And that’s not taking into account the impact on the millions of individuals whose personally identifiable information – including an image of their passport, driver’s license or state ID – will be provided to FinCEN, and which must be updated when the information changes.
The burden for companies existing before January 1, 2024 will fall mainly on small businesses, as most will not qualify for one of the exemptions. All existing corporations, LLCs, and other business entities must determine if they are required to file a report. If so, they must report certain information about themselves and they must determine who their beneficial owners are and then obtain the required personally identifiable information from their beneficial owners and, in the case of companies formed or registered on or after January 1, 2024, their company applicant(s)). They also must keep track of this information so that they can file timely updates when necessary.
Journalists can contact Frank Ready at frank.ready@wolterskluwer.com to schedule an interview with Sandra Feldman. The quotes above may also be published with proper attribution.
For nearly 130 years, Wolters Kluwer CT Corporation has been the leading provider of registered agent services, incorporation services, and legal entity compliance. It is part of Wolters Kluwer’s Financial & Corporate Compliance division and has a global reach into over 150 countries. More than 75 percent of Fortune 500 companies, 95 percent of AmLaw 100 law firms, and 350,000 small businesses trust CT Corporation to handle their compliance needs.
About Wolters Kluwer
Wolters Kluwer (EURONEXT: WKL) is a global leader in information, software, and services for professionals in healthcare, tax and accounting, financial and corporate compliance, legal and regulatory, and corporate performance and ESG. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services.
Wolters Kluwer reported 2022 annual revenues of €5.5 billion. The group serves customers in over 180 countries, maintains operations in over 40 countries, and employs approximately 20,000 people worldwide. The company is headquartered in Alphen aan den Rijn, the Netherlands.
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