Reported by Adam Schrader

A law enacted in 2021 to combat money laundering, tax fraud, and corruption went into effect on January 1, 2024, posing a legal risk for artists who do not comply, experts are warning.

Hannah Cole, a tax professional and artist herself, penned an op-ed in Hyperallergic on Tuesday, revealing that Corporate Transparency Act applies to self-employed artists. She is the founder of Sunlight Tax, a firm that educates creatives about taxes and accounting.

“My biggest concern, as someone who helps creative people manage the taxes and business setup for being self-employed, is that a lot of artists may miss the memo on this law, or assume that it’s aimed at bigger corporations, and that it doesn’t apply to them,” Cole said in emailed remarks to Artnet News.

The law is aimed specifically at limited liability corporations formed by one or two people to curb financial crimes that can be difficult for law enforcement to track. Some states do not require disclosure of the beneficial owners of LLCs, an impediment to law enforcement.

“This is a good law, and it will help law enforcement prosecute some of the most heinous crimes. But it’s important for everyone with an existing LLC or considering forming an LLC to know that they do have some paperwork to file,” Cole said. “It takes about five minutes, and it’s free. But artists definitely need to know that the law does apply to them.”

The Financial Crimes Enforcement Network, an agency in the U.S. Treasury Department known as FinCEN, said in a news release that all existing companies must file the paperwork by January 1, 2025. New companies formed beginning in 2024 will need to file the paperwork within 90 days. The paperwork only needs to be filed once, according to the FinCEN website. However, an article from the U.S. Chamber of Commerce indicates that the initial filing period will not be the only time business owners will be required to file the report to FinCEN.

For now, artists and small business owners are required to provide information for an LLC’s beneficial owners, including names, dates of birth, addresses, and a passport number or other official identification number outlined by officials.

Read full report: https://news.artnet.com/art-world/corporate-transparency-act-impacts-self-employed-artists-2417585/amp-page