The Corporate Transparency Act (CTA) came into effect January 1, 2024. The CTA requires certain companies doing business in the U.S. to disclose information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). The CTA was ostensibly enacted to combat money laundering, terrorism financing, and other financial crimes.
The CTA requires a filing from applicable companies by January 1, 2025. There have been several federal lawsuits filed to delay the implementation of the act, and corresponding bills have been weaving their way through Congress to achieve the same result. At this point however, it does not appear that litigation or legislation will secure a resolution to this issue prior to the reporting deadline.
Equipment dealers should either confirm an applicable exemption under the CTA or prepare for a filing by January 1, 2025.
The most common applicable exemption for dealers will be the large operating company exemption. A dealer must meet all three of the following requirements to be exempt:
- Employ more than 20 full-time employees (In general, more than 30 hours/week)
- Have a physical operating presence in the U.S.
- Reported $5,000,000 or more in gross receipts or sales on the entity’s applicable IRS form for the previous year
If an exemption does not apply, collecting information for the reporting could be burdensome and companies should begin preparing now for the filing deadline. Beneficial ownership reports may be filed at FinCEN’s website. For additional information and guidance on the CTA, see FinCEN’s Small Entity Compliance Guide and FinCEN’s Beneficial Ownership Information Frequently Asked Questions.
In addition to these governmental resources, Lance Formwalt recently released an article addressing CTA compliance issues. His article providing more in-depth analysis can be found HERE.
NAEDA will continue to update dealers with any developments in litigation or legislation that affect the implementation of this regulation. Please contact the association with any further questions you have relating to this issue.
