Corporate Transparency Act: Key Updates You Need to Know

The Corporate Transparency Act (CTA) enforcement stays in limbo as conflicting rulings keep coming from the courts. Over the past few weeks, the legal landscape has changed many times, leaving small businesses uncertain regarding their reporting obligations. Read through the text to learn about the recent updates.

In early December 2024, the US District Court for the Northern District of Texas issued a nationwide injunction blocking the CTA. Then plaintiffs argued the law, which requires businesses to disclose beneficial ownership information (BOI) to FinCEN, exceeded constitutional limits.

The government appealed, and on December 23, 2024, the Fifth Circuit Court of Appeals sided with the government and upheld the injunction. This meant CTA enforcement could move forward. FinCEN extended the January 1, 2025, deadline for businesses to file their BOI reports to January 13, 2025, recognizing the confusion caused by the back and forth.

Just three days later, on December 26, 2024, another panel of judges from the same Fifth Circuit Court reinstated the injunction, putting CTA enforcement on hold again. Businesses were back in limbo and the reporting requirement was in question again.

The government didn’t waste any time and took it to the US Supreme Court to request the injunction be lifted.

On January 23, 2025, the Supreme Court ruled in favor of the government and lifted the injunction. But it only addressed the injunction from one judge in Texas. Another nationwide injunction from a different judge remains in effect, so CTA enforcement is still on hold.

FinCEN responded to the Supreme Court’s decision by saying on its website that businesses do not have to file beneficial ownership (BOI) reports. Furthermore, it also stated that businesses will not be penalized for not filing while the second injunction is in effect. But businesses can still file voluntarily if they want to.

What Should Reporting Companies Do Now?

The CTA remains stalled, and many small businesses are waiting for a certain decision. Enforcement is paused for now, but legal experts advise businesses to be ready to file their beneficial ownership reports as soon as the legal battles are over. If the injunction is lifted, FinCEN could reinstate compliance deadlines very quickly, and millions of small business owners could be required to file within a short time frame.

Businesses should closely monitor FinCEN updates and consult legal experts to ensure they are prepared to comply as soon as enforcement resumes.

Suggested Read: 

CTA Enforcement Stalled Despite Supreme Court Backing Treasury Department

Corporate Transparency Act: Beneficial Ownership Filing Suspended

Corporate Transparency Act: Navigating Exemptions, Office Requirements, and UBOs