The Corporate Transparency Act of 2020, passed on January 1, 2021, was designed to help prevent companies from concealing their ownership of US businesses and to thwart illicit activities conducted through sham (or shell) companies. Unfortunately, this well-intentioned legislation is broad and sweeping—requiring almost all US entities to report to its beneficial ownership information and ownership changes to the US Department of the Treasury’s Financial Crimes Enforcement Network (“FinCen”) beginning on January 1, 2024. Yes, even small companies, asset protection entities, and mom-and-pop shops fall within this reporting requirement.
The logistics of actually filing the ownership information are not yet available, and FinCen is continuing to build a new IT system (called the “Beneficial Ownership Secure System”) in anticipation of the January 1, 2024 launch date. However, the Department of Treasury has announced that the failure to comply with reporting requirements can lead to civil and criminal penalties, including a maximum penalty of $500 per day (up to $10,000) and imprisonment for up to two years.
Attorneys at Thrash Carroll & Vanway continue to monitor the Department of Treasury updates and the development of the IT system. We hope to update clients once more information becomes available.
In addition to these new disclosure issues, many business owners believe that all they need to do in order to protect their assets is to establish an LLC or a corporation. However, there is much more to it than that. A business entity must be formed and maintained in accordance with Texas law as well as meet the present and new federal filing requirements. And unfortunately, courts across the country (and in Texas) are filled with lawsuits against companies and individuals who failed to recognize the importance of respecting the formalities of running a company.
In response to these new requirements TCV is introducing a Business Basic Training bootcamp for our current clients and new business owners. It is a unique and innovative 2-year program designed by our team of former litigators to train business owners on the ins and outs of running their company in a way that helps the business owners meet the state and federal compliance requirements and maintain the entities’ liability shield in the event of a lawsuit.
Trainees in the Business Basic Training program will receive
- assistance with their annual meetings (including reminders, minute templates, samples, and follow ups), an annual review meeting with minutes (virtually or in person)
- our proprietary 10-point liability shield checklist,
- verification and reminders of annual reporting requirements (including the public information report and franchise tax filings required by the Texas Comptroller),
- coordination with the business’s CPA as appropriate,
- notifications of important case law or statutory updates, and
- continuous service as the business’s registered agent.
In the meantime, if you have any questions regarding your obligations under the Corporate Transparency Act or state law, please email your attorney at TCV Law Group or reach out to us at [email protected] or by phone at 512-263-5400.