A new federal law, the Corporate Transparency Act, now requires almost every Business entity in Colorado to register with the Treasury Department’s Federal Crimes Enforcement Network. This law applies to LLCs, DBAs, and corporations of any size, and it is intended to prevent money laundering.
Under this law, anyone who has at least a 25% ownership in a company or who manages a company must file a Beneficial Ownership Information report with the U.S. Treasury of Financial Crimes Enforcement Network. Failure to comply can result in fines of $500 per day, up to $10,000, and up to two years in prison.
One business owner affected by this law is Jacqueline Webster, an artist turned entrepreneur with a photography business in Golden. She came across the law online and expressed frustration at not being informed about it directly.
The penalties for noncompliance are steep, but businesses established before January 1 have until the end of the year to comply. New businesses have 90 days. Additionally, businesses have 30 days to update the filing if there are any changes, such as a new owner or address. The database is non-public and only accessible by law enforcement.
Dave Ratner with the Creative Law Network is concerned that independent artists and small business owners will be caught off guard by this law. However, he reassures that while small business owners should not ignore the law, the penalties are specifically for willful failure to file.
Webster, despite expressing initial frustration, mentions that the filing process only took her about 20 minutes and is free.
It is important for businesses in Colorado to be aware of and comply with the Corporate Transparency Act to avoid the stiff penalties associated with noncompliance.
Historical Background:
The Corporate Transparency Act was signed into law in January 2021 as part of the National Defense Authorization Act. Its purpose is to increase transparency in corporate ownership and prevent illicit financial activities such as money laundering, terrorism financing, and other forms of financial crime.
By Shaun Boyd, Political Specialist at CBS News Colorado.
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