Corporate Transparency Act News
Last week, a federal judge in Texas halted the implementation of the Department of the Treasury’s Corporate Transparency Act (CTA).
Background: Enacted in 2021, the CTA is intended to help prevent and combat money laundering, terrorist financing, corruption, and tax fraud. The CTA establishes a beneficial ownership reporting requirement for corporations, limited liability companies, and other similar entities formed or registered to do business in the United States. Under the CTA, beneficial ownership reports must be filed with the Financial Crimes Enforcement Network (FinCEN), a bureau within the U.S. Department of Treasury. Prior to the ruling, small businesses meeting certain criteria would have had to file reports by January 1, 2025 or risk facing fines and criminal penalties.
There have been numerous challenges to the CTA across the country, with the most recent challenge being heard last week in Texas, Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.). The order from the Texas judge has halted implementation of the CTA’s beneficial ownership reporting requirements until the conclusion of legal proceedings. Following that order, The Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024.
What this means for your business:
This preliminary relief means that until the proceedings are concluded, reporting companies are NOT currently required to file their beneficial ownership information with FinCEN and are NOT subject to liability if they fail to do so while the order remains in force. In an alert on their website, FinCEN goes on to say that reporting companies may continue to voluntarily submit beneficial ownership information reports.
Read More:
U.S. Chamber Article: What Every Small Business Needs to Know About the Corporate Transparency Act
FinCEN Beneficial Ownership Information website: https://fincen.gov/boi
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