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The USFWC and DAWI are currently researching resources to pull together for our members and partners to understand the Corporate Transparency Act. This is a new piece of federal legislation that comes into effect on January 1, 2024, and will impact most small businesses in the U.S.
What is the The Corporate Transparency Act (CTA)?
Enacted in 2021, the Corporate Transparency Act was passed to enhance transparency in entity structures and ownership to combat money laundering, tax fraud, and other illicit activities. It’s designed to capture more information about the ownership of specific entities operating in or accessing the U.S. market. The Corporate Transparency Act established the Beneficial Ownership Information program (BOI program), and is overseen by FinCen, the Financial Crimes Enforcement Network which is a part of the U.S. Department of Treasury.
As a membership organization, the USFWC is working alongside our research and development partner, the Democracy at Work Institute, and other ecosystem partners to bring together information on the BOI program and share it with our members and partner organizations.
Why is this important for worker co-ops?
The Beneficial Ownership Information program, requires reporting on business owners and individuals who exercise significant control over a business. For businesses that are not cooperatives, this is a relatively straightforward reporting requirement for the owner(s) of the business. Because cooperatives have a broad-based ownership model, it is not clear currently who exactly within the business ownership needs to report. For worker cooperatives, this can be especially tricky to understand.
The law requires reporting from “Beneficial owners”, with the following definition:
any individual who, directly or indirectly, either:
- Exercises substantial control over a reporting company, or
- Owns or controls at least 25% of the ownership interests of a reporting company.
Help! What do we do? Is this an emergency?
The BOI program will begin to be enacted in 2024, and it will affect most small businesses in the U.S. We encourage all businesses to begin talking with their legal and accounting partners. Here are a few key facts:
- NEW businesses that incorporate on or after Jan 1, 2024 must be particularly attentive, as they only have 90 calendar days to report starting from the date of incorporation. Businesses created after Jan 1, 2025 will only have 30 calendar days to file.
- EXISTING businesses have until Jan 1, 2025 to report. While it’s important to understand this legislation and report to the federal government, you have until Jan 2025 to do so.
The USFWC and DAWI will be putting together a webinar in early 2024 to review the requirement, and how it relates to worker cooperatives. Before then, we will be sure to share information from trusted partners on this issue.
More information on the FinCen website
What if we just don’t file?
The USFWC and DAWI stress the importance of filing, as the fees outlined for non-reporting are high, and can accumulate up to $10,000.
What information is required to be shared with FinCen through the Beneficial Ownership Information program?
- The name of the beneficial owner;
- Date of birth;
- Address; and
- An identifying number from an acceptable identification document such as a passport (U.S. or foreign), U.S. driver’s license, and the name of the issuing state or jurisdiction of the identification document.
As we begin to understand this act, we will share what we know about how this information is stored and used.
Where else can I find information on the Corporate Transparency Act / Beneficial Ownership Information Reporting?
About the CTA
- FinCEN’s guide for small businesses
- Overview of the Corporate Transparency Act (CTA)
- FAQ from FinCen
Trainings from the co-op community about the Corporate Transparency Act / Beneficial Ownership Information Reporting
Past trainings (please reach out to the presenter for more information)
The Corporate Transparency Act: New Reporting Requirements and Implications for Cooperatives webinar
Presented by: National Society of Accountants for Cooperatives and NCBA CLUSA
Date: February 7, 2024 1:00pm ET
Cost: $0.00 NSAC Member and NCBA Member / $56.00 Non-Member
Language / Lengua: English
Preparing To File 2023 Taxes As An LLC Cooperative | Preparándose para la presentación de impuestos 2023 como cooperativa LLC
with room for questions about CTA
Presented by: U.S. Federation of Worker Cooperatives
Date: Monday, February 12 / lunes, 22 de febrero, 7:00 pm ET / 6:00 pm CT / 5:00 pm MT / 4:00 pm PT | 120 min
Cost: Free / Gratis
Language / Lengua: English / Español
Webinar: Immigrant Co-ops and the Corporate Transparency Act / la Ley de Transparencia Empresarial y las cooperativas de inmigrantes
Presented by: Cooperative Development Institute, Cooperative Fund of the Northeast, Suffolk Law School’s Transactional Clinic
Date: Thursday, February 22 / jueves, 22 de febrero, 6:00 pm ET / 5:00 pm CT / 4:00pm MT / 3:00 pm PT | 120 min
Cost: Free / Gratis
Language / Lengua: English / Español
Why your worker co-op should pay attention to the Corporate Transparency Act | Navegando la Ley de Transparencia Corporativa para Cooperativas de Trabajadores
Presented by: U.S. Federation of Worker Cooperatives
Date: Monday, February 26 / lunes, 26 de febrero, 4:00 pm ET / 3:00 pm CT / 2:00pm MT / 1:00 pm PT, 60 min
Cost: Free / Gratis
Language / Lengua: English / Español
Related Articles
- Corporate Transparency Act: it’s time to get prepared from our member, Jason Wiener | p.c.
- The Corporate Transparency Act – Preparing for the Federal Database of Beneficial Ownership Information from the American Bar Association
- The Corporate Transparency Act: Deniers Beware from the American Bar Association
- Are you ready? The Corporate Transparency Act becomes effective Jan 1, 2024 from Reuters
Scam Alert: FinCEN does not send unsolicited requests. FinCEN has been notified of recent fraudulent attempts to solicit information from individuals and entities who may be subject to reporting requirements under the Corporate Transparency Act. The fraudulent correspondence may be titled “Important Compliance Notice” and asks the recipient to click on a URL or to scan a QR code. Those e-mails or letters are fraudulent. Please do not respond to these fraudulent messages, or click on any links or scan any QR codes within them.
