CORPORATE TRANSPARENCY ACT
In less than a month, a Federal law will take effect that will impact many organizations that do business in the U.S. – the Corporate Transparency Act (CTA). The CTA is designed to capture information on each entity, its beneficial owners, and those persons who file or direct the filing for the formation of the entity. Companies in the sporting industry and every industry, should be aware of the upcoming deadlines and reporting requirements due to the CTA’s wide-reaching impacts. Willful failure to comply with the CTA could lead to monetary fines as well as imprisonment.
Beginning on January 1, 2024, FinCEN (the Financial Crimes Enforcement Network), will launch its online filing system for companies to submit beneficial ownership information reports. While many companies will have a legal obligation to file a report, there are some exemptions. Briefly, any entity that is in existence must assess whether they are obligated to file with FinCEN, or whether they are exempt. Any entity that is formed in 2024, must file with FinCEN within 90 days of formation, unless they are exempt. Any entity in existence prior to January 1, 2024 must file before January 1, 2025, unless exempt. For more information, click here.
What does this mean for clubs? Prudent clubs will consult with counsel and assess whether they are obligated to file or whether they are exempt. Failure to file carries a penalty of $500 per day. Even more, entities that are forming clubs should be aware of this law and keep track of the 90-day window for filing.
