A new law targeting the obscurement of crimes achieved through the use of “shell” companies will swing into effect starting January 1. Called the Corporate Transparency Act, it aims to abate the United States’ infamous designation as a breeding ground for these types of entities.
Imbued with the magnitude of bringing a significant amount of clarity to the business landscape, the law mandates tens of millions of businesses across the country to report their ownership information. This rule marks the first instance such a requirement has been put in place. Nevertheless, the law does not appear to be common knowledge amongst business owners and corporate advisors alike. This lack of awareness predicates a mounting concern that companies may face severe penalties if they do not comply with the regulation.
A recent survey has unveiled startling findings that awareness about the legislation, even among certified advisors such as public accountants and lawyers, verges on negligible. This leaves the majority of entities that will be directly impacted by the law potentially blindsided, faced with hefty fines or even prison time for non-compliance.
The penalties for failing to comply with the Corporate Transparency Act are high stakes. Firms could face extreme financial penalties, and in severe cases, business owners may even face imprisonment. Ensuring awareness of, and compliance with, new regulations should be a priority for businesses and corporations as we approach the start of a new year.