Effective January 1, 2024, the Corporate Transparency Act (CTA) introduced significant reporting obligations for many business entities, including those commonly used in rental property ownership. It is essential to understand how this law affects you, as non-compliance can result in steep penalties. MEETING THE CORPORATE TRANSPARENCY ACT DEADLINE: HOW TO AVOID FINES
WHAT IS THE CORPORATE TRANSPARENCY ACT?
The CTA is part of the Anti-Money Laundering Act of 2020. Its purpose is to combat illicit financial activities, such as money laundering and fraud, by increasing transparency regarding the ownership of business entities in the United States. Under the CTA, certain entities must report specific
information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. The reported information will be stored in a secure database accessible to law enforcement and certain government entities.
DOES THE CTA APPLY TO YOU?
The CTA applies to “reporting companies”, a term that encompasses many common business structures used in real estate, such as limited liability companies (LLCs) and corporations.
If you own rental properties through one or more LLCs or similar entities, you’re likely subject to the CTA’s reporting requirements unless your entity qualifies for an exemption.
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