How The Corporate Transparency Act Impacts Estate Planning In Tampa
The Corporate Transparency Act (CTA) is a federal law that went into effect on January 1, 2024. Part of the National Defense Authorization Act, it requires certain types of businesses to report ownership information to the Financial Crimes Enforcement Network (FinCEN).
The goal is to crack down on criminal enterprises that use a seemingly legitimate business as a front and identify actual owners. Our Tampa estate planning attorney explains more about the CTA and how it could impact estate planning.
What Is The Corporate Transparency Act?
Criminal enterprises often hide behind legitimate businesses, which provides an effective front for owners engaged in money laundering, tax fraud, funding terrorism, or other illegal activities. The Corporate Transparency Act (CTA) aims to root out those owners and hold them accountable for their actions.
The CTA was enacted in 2021 and finally went into effect in 2024. It requires businesses, referred to as reporting companies, to identify beneficial owners. A beneficial business owner includes all of the following:
- Business partners and members;
- Majority shareholders and trustees;
- Senior executives who are deemed beneficial owners;
- Anyone who owns 25 percent or more of the business or has significant control over its decisions.
Each reporting company must provide information on all beneficial owners. This includes their name, date of birth, addresses, and unique identifying information, such as a Social Security card, driver’s license, or passport, along with a picture of the document.
As the CTA went into effect in January of 2024, any companies formed after that time have 90 days to file their initial report with the Financial Crimes Enforcement Network (FinCEN). Companies formed prior to 2024 have until January 2025 to file. The grace period for companies formed after 2025 is 30 days. Businesses are also required to report any changes in ownership within 30 days. Failure to comply penalties include a $500 daily civil penalty, fines of up to $10,000 and a possible two-year prison sentence for those that do not provide or update beneficial ownership information with FinCEN.
How The CTA Applies To Tampa Estate Planning
Estate planning plays an important role in protecting business owners, and it is vital to be aware of the CTA reporting requirements. Most federal laws apply only to major corporations, but the CTA applies to small business owners as well. Penalties for not providing the required information include heavy fines, asset seizure, and a potential jail sentence.
However, the CTA also has the potential to impact the estate plans of individuals and families. While an estate or trust is not considered a reporting company, it may hold a financial interest in one, thus triggering CTA requirements. Current contact and identifying information may be required from any of the following:
- The executor of an estate;
- A trustee or settlor;
- Beneficiaries who can be considered beneficial owners of the reporting company,
Request A Consultation With Our Tampa Estate Planning Attorney Today
Under the Corporate Transparency Act (CTA), business owners, estate administrators, trustees, and certain beneficiaries may all be subject to strict federal reporting requirements. To ensure you are in compliance, request a consultation with Strategic Counsel Law Group, L.C. Call or contact our Tampa estate planning attorney online today.
Sources:
fincen.gov/boi
uschamber.com/co/start/strategy/small-business-corporate-transparency-act
