The Corporate Transparency Act was enacted in January 2021 to combat the contribution and circulation of illicit funds in the United States. Many policy makers believe that this will deter criminals and their criminal acts. However, the effectiveness of this Act is yet to be seen. The Corporate Transparency Act requires both companies and beneficial owners to submit a report to the Department of Treasury’s Financial Crimes Network (FinCEN). Both requirements are discussed below using an example. THE CORPORATE TRANSPARENCY ACT: THE FINAL RULES ARE IN – NEW REQUIREMENTS AHEAD
“Larger Pockets, LLC” is a profitable property management company founded by Brandon, David, and Tony. The three of them each agreed to own 1/3 of the LLC’s membership interests. Rob, a friend of theirs, came aboard later. While he didn’t own any membership interests, he agreed to be the manager of Larger Pockets. Each of the four men have different backgrounds and different areas of expertise. This wide range of available knowledge has resulted in Larger Pockets’ success. On top of employing 18 employees, the company generated over $6 million in revenue in the past year. David recently found out from a friend that Congress had passed the Corporate Transparency
Act. Nervous about what impact it would have on Larger Pockets, he went to the other three partners to voice his concerns.
• How would it affect their business?
• How would they have to report personal information to the government?
• What penalties would they face if they failed to comply?
The answers to each of these questions follow in this article.
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