How to Comply With the Corporate Transparency Act

The Corporate Transparency Act is a new law with a potentially big impact on Colorado small businesses.

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The Corporate Transparency Act is a new law with a potentially big impact on Colorado small businesses. Read on to learn more about what it is, and how it might affect your business.

What is the Corporate Transparency Act?

The Corporate Transparency Act, or “CTA” for short, requires many small businesses to file beneficial ownership information reports with the U.S. Department of Treasury’s Financial Crimes Enforcement Network.

What is the Status of the Corporate Transparency Act?

The status of the Corporate Transparency Act has been in flux since early December 2024, when the act was subjected to a preliminary nationwide injunction by a Texas District Court, pausing its enforcement. Then, following an emergency motion, the Fifth Circuit’s motions panel stayed the lower court’s injunction for a brief period of time in late December, setting a new reporting deadline of January 13, 2025 for reporting companies formed prior to January 1, 2024. Days later, following review by the merits panel, the Fifth Circuit vacated the stay, once again halting enforcement nationwide. Then, predictably enough, on December 31, the government appealed the Fifth Circuit’s opinion to the Supreme Court.

Given the uncertainty about the future of the act, many businesses have elected to voluntarily submit beneficial ownership reports, rather than continuing to monitor the situation as it unfolds and risk noncompliance.

How to Comply with The Corporate Transparency Act

Who Must File BOI Reports

The Corporate Transparency Act requires that “reporting companies” must file BOI reports with the Financial Crimes Enforcement Network unless an exception applies. The definition is broad, including all domestic corporations, LLCs, and other companies formed with the secretary of state’s office. On the other hand, exceptions for reporting are fairly limited—including certain large businesses already subject to securities reporting requirements, banks, financial institutions, investment funds, and tax-exempt entities.

Shadow Mountain Business Law can help you determine whether you must file beneficial ownership information reports.

How To File BOI Reports

Beneficial ownership reports can be filed by online with the Financial Crimes Enforcement Network through the BOI E-Filing System.

Shadow Mountain Business Law can help you prepare for and file your BOI report.

What Information Do You Need to Report

Reporting businesses must file the following information with their beneficial ownership report:

  • Business name, tax ID #, and address
  • The name, date of birth, and current address of all beneficial owners
  • An identifying document for each beneficial owner

Penalties for Noncompliance

Penalties for noncompliance can be severe, particularly for the many small businesses that are the primary subjects of this new law. Noncompliant businesses may face fines of up to $10,000 or even criminal penalties.

Conclusion

Have questions about the impact of the Corporate Transparency Act on your business? Reach out using our contact page or LinkedIn.

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