Corporate Transparency Act Updates

Ongoing Corporate Transparency Act (CTA) Legal Battle Update: 

Update: 1/8/2025

by Michael Leach

Businesses are facing a rollercoaster of uncertainty regarding the Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) filing requirements. The ongoing court case, Texas Top Cop Shop vs. Garland, has caused business owners more than just a little confusion and stress, as the back-and-forth between appeals and requests goes on and on, leaving businesses feeling in a state of flux. This has led to many businesses asking 'Do we file or do we not?' out of fear of potential fines.

Here’s what we know at the moment: As of January 8, 2025, BOI filing is still not mandatory. However, the Department of Justice (DOJ) recently filed an application for a stay of the injunction with the U.S. Supreme Court asking to reinstate the filing requirement. The plaintiffs in the case have until January 10th to respond.

What Businesses Can Do Right Now?:

• Stay Informed: Regularly check FinCEN.gov (https://fincen.gov/) for updates on the court case and potential changes to the BOI filing requirements.
• Voluntary Filing: Businesses can still voluntarily file their BOI information on FinCEN.gov if they wish to do so.

Corporate Transparency Act (CTA) Filing Update: Fifth Circuit Reversal (December 26, 2024)

Update:12/28/2024

Important NEW Update for Businesses: On December 26, 2024, The U.S. Court of Appeals for the Fifth Circuit has reversed its previous decision regarding the enforcement of the Corporate Transparency Act (CTA). This reversal comes just days after the court initially sided with the government, allowing them to enforce CTA while an appeal challenging its constitutionality played out.

What This Means for Businesses (At the moment): 

• Temporary Reprieve: As of December 26, 2024, the nationwide injunction (originally submitted on 12/3/2024) on CTA remains in effect.  This means businesses are not currently obligated to file Beneficial Ownership Information (BOI) reports with the Department of Treasury's Financial Crimes Enforcement Network (FinCEN) .

• Two Options: Businesses should evaluate these options to determine the most appropriate course of action for them.

  • Voluntary Filing: Businesses concerned about potential future delays or who simply want to comply can still choose to file their BOI reports voluntarily.
  • Monitor closely for Updates: Businesses can choose to wait and see how the case unfolds. However, business owners should closely monitor the FinCEN website ( fincen.gov) for official updates and potential revised filing deadlines.

Uncertain Timeline: While this reversal provides temporary relief for businesses from having to file BOI, the legal battle surrounding the CTA is ongoing. The final outcome of the case will determine the ultimate fate of the BOI filing requirement.

Staying Informed: We recommend businesses stay informed by:

• Regularly checking the FinCEN website for updates.
• Consulting with legal counsel familiar with the CTA and its ongoing legal challenges. (BFG can assist with this!)

Corporate Transparency Act (CTA) was Reinstated 12/23/2024

Update: 12/26/2024

On December 23, 2024 the Fifth Circuit Court of Appeals reinstated the filling requirement for BOI, extending the deadline to the very near date of January 13, 2025.

We urge all business owners to file their BOI with FinCEN as soon as possible to avoid fines.

Need help with filing? Contact BFG at 435-628-7004

See court documents here

Corporate Transparency Act (CTA) Enforcement Was Temporarily Blocked by Federal Court on 12/3/2024

12/3/2024

A significant legal development has emerged that could impact businesses across the United States. On December 3, 2024, U.S. District Judge Amos Mazzant of the Eastern District of Texas issued a preliminary injunction, temporarily halting the enforcement of the Corporate Transparency Act (CTA). This decision has far-reaching implications for businesses, particularly those required to file Beneficial Ownership Information (BOI) with the Financial Crimes Enforcement Network (FinCEN).

Read the court documents here > Texas Top Cop Shop, INC, ET AL., v. Merrick Garland, AG U.S. ET AL.,

What is the Corporate Transparency Act (CTA)?

Enacted by Congress in 2021, the CTA is a federal law designed to enhance transparency in corporate ownership. It mandates that certain types of businesses, including corporations, limited liability companies (LLCs), and limited partnerships, report information about their beneficial owners to FinCEN. Beneficial owners are individuals who directly or indirectly own or control 25% or more of a company.

The primary objective of the CTA is to combat illicit finance, including money laundering, terrorist financing, and tax evasion, by making it more difficult for criminals to hide their identities behind opaque corporate structures.

Why the CTA Enforcement was Blocked on 12/3/2024?

A group of plaintiffs, including individuals and businesses, filed a lawsuit challenging the constitutionality of the CTA. They argued that the law:

• Violates the Tenth Amendment: The plaintiffs contend that the CTA exceeds Congress's authority under the Commerce Clause and intrudes on the powers reserved to the states.
• Infringes on First Amendment Rights: They argue that the requirement to disclose personal information, such as addresses and dates of birth, constitutes a violation of their First Amendment rights.
• Imposes Unreasonable Search and Seizure: The plaintiffs claim that the CTA's reporting requirements constitute an unreasonable search and seizure under the Fourth Amendment.

Judge Mazzant agreed with the plaintiffs' arguments, finding that they had demonstrated a likelihood of success on the merits of their constitutional claims. The court expressed concerns about the potential overreach of federal power and the impact of the CTA on individual privacy rights.

What Should Businesses Do Now?

Update: 12/28/2024

Following the Fifth Circuit's December 26, 2024, decision to reverse course and reinstate the December 3, 2024, preliminary injunction against the BOI filing requirement, businesses are temporarily not required to file with FinCEN. However, this is a temporary reprieve.

Businesses should closely monitor legal developments. If the injunction is lifted, they may need to comply with BOI filing requirements on short notice. Consulting legal counsel is advisable to understand the CTA's specific implications and the injunction's impact on their business.

Beneficial Ownership Information can be filed on a voluntary basis, if business are wishing to do so.

As the legal challenges to the CTA continue, businesses should remain prepared to adapt to potential regulatory changes.