New small business regulations: What owners must do to avoid a $500 per day penalty

Tuesday April 12, 2022 Published in
A Business Owner’s Guide to the Corporate Transparency Act 2022 New Regulations and Recommendations (1)

The Corporate Transparency Act (CTA) is a historic new law impacting millions of America’s existing small corporations and LLCs, as well as newly formed entities. This new law requires the disclosure and reporting of business ownership information directly to the Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Department of Treasury.

This is the first time in history that the federal government will create and maintain a database of private company ownership for law enforcement purposes. The purpose is to enhance national security by preventing the use of corporations and LLCs for criminal activities, such as money laundering.

The period for public comment regarding the CTA expired on February 7, 2022. FinCEN is expected to finalize the regulations and begin enforcement of the CTA’s regulations at some point this year. Based on the criteria, more than 90 percent of companies in the United States must share their ownership information with FinCEN to comply and avoid stiff penalties.

Willful violations are subject to substantial fines ($500/day) and criminal penalties (up to $10,000), including prison time. We urge you not to wait to comply with this new law.

For an update and summary on the CTA and its implications, including frequently asked questions, download our most recent brief here: A Business Owner’s Guide to the Corporate Transparency Act.

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Wegman Hessler specializes in business law for business leaders, applying legal discipline to solve business problems to help business owners run smarter. For more than 50 years, this Cleveland business law firm provides full-service strategic legal counsel for closely held businesses. Learn more at www.wegmanlaw.com.

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