Seldom has an elephant-in-the-room had so little publicity:  The Corporate Transparency Act, a new Federal law with draft regulations expected to become effective during 2022, creates mandatory hoops though which companies, including start-ups, must jump.  Here is the briefest of summaries:

The Act and proposed regs aim to discourage money laundering by requiring all “smaller private” companies which are registered in any State of the United States to report the following: corporate name, address and Federal tax ID number; identity of control people including 25% beneficial owners and those having substantial control of operations (name, date of birth, ID number from a state-issued ID); similar personal information for each “applicant”– a person who registers the company with the secretary of State of the jurisdiction of formation (perhaps indeed your lawyer!).

This applies to existing companies and newly formed companies; extant companies have a year to comply, while new entities per current draft regs have 30 days to file.  Changes must be filed within 30 days of the change. The definition of companies picks up corporations, LLCs, most partnerships, some trusts and other kinds of entities.  I suspect this will even reach the newest entity invention, the Wyoming DAO (Decentralized Autonomous Organization), an opaque entity seemingly popular with cyber and NFT communities).

Exempt per current draft regulations: entities employing more than 20 FTEs in the US, and filing Federal income tax returns showing $5M in sales, and with a physical US office (all three elements must be present).  Also exempt: companies already regulated by banking, insurance, SEC regulatory bodies.

Access to this collected is afforded of right to Federal agencies and by consent granted to State regulators. It is expensive not to comply: civil fines of $500 per day and possible criminal fines of $10,000 and two years in prison.