CORPORATE TRANSPARENCY ACT: LEGAL BATTLE CONTINUES
UPDATE 12/30/2024
Required; On Hold; Required; On Hold
Recent developments in the ongoing legal battle over the Corporate Transparency Act (CTA) have once again shifted the landscape for businesses.
History:
The CTA was enacted in 2021 to help the U.S. Government combat money-laundering, terrorism, tax evasion, and other financial crimes by creating a national database of organizations in the U.S. that identifies the human beings behind the companies as owners or controlling persons.
The Process and Court Proceedings Read Like a TV Drama:
- January 1, 2024 - Final regulations under the CTA were released and became effective. Deadlines for reporting are set for January 1, 2025 for entities created before 2024. (Corporations have to file CTA reports.)
- December 3, 2024 - The United States District Court for the Eastern District of Texas issued a preliminary nationwide injunction, halting the enforcement of the Corporate Transparency Act.
(Required CTA reporting is on hold...)
- December 23, 2024 – The government’s emergency motion to reinstate the CTA’s enforcement was granted by the Fifth Circuit Court of Appeals. Deadlines are pushed back.
(Corporations have to file CTA reports.)
- December 27, 2024 - The merits panel of the Fifth Circuit Court of Appeals reinstated the injuction.
(Required CTA reporting is on hold...)
What is Going to Happen Next?
The Fifth Circuit Court has noted that:
- The appeal remains expedited, and a briefing schedule will be issued soon.
- The merits panel will consider the "weighty substantive arguments" presented by both parties.
What Should You Do?
Despite the current hold on enforcement, we recommend businesses continue to prepare and file their reports as originally planned. While the CTA's enforcement is currently suspended, this situation remains fluid. Proactive preparation is the best strategy to navigate this uncertain legal environment.
- Gather and organize your beneficial ownership information;
- Proceed with report preparation as if deadlines were still in effect;
- Reach out to our firm if you want assistance filing; and
- Check back here often to find out how this will resolve.
Our firm is closely monitoring this rapidly evolving situation. We will provide updates as new information becomes available. If you have any questions about how these developments might affect your business or need assistance with CTA compliance preparation, please don't hesitate to contact us.