Breaking News: Corporate Transparency Act Blocked

Posted on December 6, 2024, by Starlett Massey

On December 3, 2024, the Corporate Transparency Act (“CTA”), which requires U.S. business entities to report stakeholder information to the Treasury Department, was temporarily blocked nationwide by a Texas federal court.

This decision comes less than a month before the January 1, 2025 reporting deadline. As of now, it is unclear whether the temporary injunction will push back the deadlines for reporting if and when the injunction is lifted. With this new development, it is vital for each business owner to understand the CTA and consult with their legal counsel to determine whether or not they are required to submit their Beneficial Ownership Information (“BOI”) reports to the Financial Crimes Enforcement Network of the U.S. Department of the Treasury (“FinCEN”) by the deadline.

What is the Corporate Transparency Act?

The CTA was enacted by the federal government in 2021. It requires all companies registered to do business in the U.S. to disclose the identities of the individuals who own and control them. It is designed to help the federal government fight against illicit activities, such as tax fraud, terrorism funding, and money laundering.

Under the CTA, each company’s BOI Report is submitted to FinCEN. The information will be stored in FinCEN’s secure, centralized database to be used for purposes specified by law.

Each company’s Beneficial Owners (meaning everyone who owns or controls at least 25% of a company) must be included in the Reporting Company’s report. For more detailed information on the CTA and who it affects, see MLG’s blog article, “What All Business Owners Need to Know About the Corporate Transparency Act.”

FinCEN’s penalties for failure to report and inaccuracies in reports are severe, including high fines and, potentially, prison time. With the temporary hold placed on the CTA’s regulations, it is important for business owners to understand when or if they need to file their reports.

What to do next?

It is unclear whether the current reporting deadlines will be extended if the temporary court order is lifted. FinCEN has also provided BOI reporting extensions to victims of recent natural disasters, including Hurricanes Debby, Helene, and Milton, which may affect many Florida businesses’ BOI Report deadlines as well. 

As a result of these factors, MLG recommends businesses consult with an attorney, as reporting requirements must be evaluated on a case-by-case basis. Contact us today to schedule an appointment to evaluate, advise, and, if needed, perform CTA reporting for your business.