CORPORATE TRANSPARENCY ACT: LEGAL BATTLE CONTINUES
UPDATE 01/31/2025
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.
What is the Latest?
Last week the Supreme Court lifted the injunction - so owners would now be REQUIRED to file their CTA reports....BUT FinCEN decided to delay enforcement. FinCEN released further guidance.
"In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports."
So, while the Supreme Court lifted the injunction, FinCEN is declining to enforce the act.
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...)
- January 24, 2025 - The Supreme Court lifted the injunction
(Corporations have to file CTA reports.)
- January 25, 2025 - FinCEN declines to enforce the reporting and has paused enforcement.
(CTA reporting is encouraged but not required.)
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.