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Fines Increase for Businesses that Need to Report

By  Legacy Law Firm  ·  1 minute read

On January 25, 2024, the Financial Crimes Enforcement Network published its final rule to reflect inflation adjustments to its penalties. This affects several U.S. Code citations, but one in particular that went into effect beginning Jan. 1, 2024, is the Corporate Transparency Act (CTA). The original daily fine for not reporting was $500. The updated daily fine reflecting inflation adjustments is $591 per day. 

The CTA requires many existing businesses and businesses formed after the new year to report to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) information about the business, its beneficial owners, and in some instances, the business applicant.

Typically, unless an exemption applies, corporations, limited liability companies, limited partnerships, limited liability partnerships, and limited liability limited partnerships are required to report. Common exemptions include businesses that:

  • are publicly traded;
  • have more than 20 full-time U.S. employees;
  • have more than $5 million in gross receipts or sales from the previous year, as evidenced by the previous year’s federal income tax return;
  • have a physical office location in the U.S.;
  • are already subject to government oversight that imposes similar reporting requirements, such as banking, utilities, or insurance; or are subsidies of exempt organizations.

The CTA requires certain businesses, referred to as “reporting companies,” to disclose to FinCEN information about the business, its beneficial owners, and in some instances, the business applicant. The term “reporting company” or “reporting companies” is defined as a company with 20 or fewer employees and that is formed by filing a document with the Secretary of State or other equivalent official. Since general partnerships and sole proprietorships are not filed with the Secretary of State or other equivalent official, these businesses are not considered “reporting companies” for purposes of the CTA.

If you have any questions about these adjustments, give our office a call at (605) 275-5665.

Civil Monetary Penalties