Beginning in 2024, some businesses and people with substantial control of a company will need to file new identifying paperwork or face fines, according to Arizona officials.
The Corporate Transparency Act was signed into law in January 2021 in an effort to “combat money laundering and other illegal activities,” according to the Arizona Corporation Commission.
Starting on Jan. 1, 2024, some businesses will have to file a report with the Financial Crimes Enforcement Network, part of the Department of Treasury, with information about business owners.
People who have substantial control in a business or 25% interest in a business will also need to file paperwork, according to officials.
The information needing to be filed includes full names, birth dates, addresses, and other identifying information like passports or driver's licenses. The filing will help prevent “bad actors” from “(hiding) behind corporations…and other business types,” officials say.
Non-exempt companies created or registered before Jan. 1, 2024, will have one year to file the report. Companies created or registered after Jan. 1, 2024, will have 90 days. Starting in 2025, the report will have to be filed within 30 days.
Violators could face a fine of up to $10,000 and/or imprisonment, according to a document.
“So at a very basic level, the state governments require that when you create a company that is incorporated, that's not you personally, that you disclose an address and contact information,” Chad Heinrich, Arizona Director for the National Federation of Independent Business told ABC15. “This federal law adds another duplicative layer of information going further into the depths, including your birthdate, federal identification numbers, such as your passport or ID and other personal information.”
Although the law goes into effect in just a few days, not many small businesses even know about it.
“We have roughly 300,000 members in the country and from our research, 90% of our members who are pretty engaged small business owners didn't even know of the requirement,” Heinrich said.
Aaron Schofield owns Luana’s Coffee and Beer in Phoenix and says he had no idea about this bill.
“I don’t know if this is something I completely missed, but I asked around, I own a coffee shop in Downtown Phoenix so I have some pretty educated people around me every day and no one has heard about it,” he said.
ABC15 asked about a dozen other small business owners in the area and only one said they knew about the new bill that’s set to take effect soon.
The Arizona Corporation Commission says questions can be submitted to the email address answers@azcc.gov or by calling the customer service line at 602-542-3026.
