The deadline is approaching for investors and real estate professionals to comply with the Corporate Transparency Act (CTA)

Signed into law in 2021, the CTA aims to prevent criminals from shuffling money around through various business entities. Think tax fraud, money laundering, buying assets anonymously, funding terrorist organizations, and the like.

As the name of the legislation implies, Big Brother requires certain entities to bring their businesses to the light of the day by volunteering reams of information to the Treasury Department’s Financial Enforcement Network (FinCEN). If the name of this agency sounds ominous, it is and if subject to the law, violators can be penalized with a daily fine of $500 a day and even face imprisonment.

Who is subject to CTA? 

Limited Liability Companies (LLCs),  C-Corporations, or SE-Corporations if there are less than 20 employees or receive under $5 Million in cash receipts. There is a vast amount of members in the real estate community who fall under this category.

The law wants to ascertain who “beneficial owners” are, namely those who exert substantial control over the company or have at least a 25% ownership stake.

Though a little dated - companies can electronically register their company on the FinCEN website, this provides a good overview of the law

 

 

 

Submit your information on the FinCEN website to get up to compliance →

Article: The Impact of the Corporate Transparency Act on Real Estate →

Download FinCen's Small Entity Compliance Guide →