The saga continues over the Corporate Transparency Act (CTA), which was slated to take effect on January 1, 2025. The CTA is a federal law that requires many companies created prior to January 1, 2024 to file a beneficial ownership information form with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) by January 1, 2025. The purpose of the CTA is to create a national database of businesses in the U.S. and the people behind them (both owners and those in control) as part of an increasing effort to combat money-laundering, terrorism, tax evasion, and other financial crimes. It has come under substantial legal challenges.
On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against enforcement of the CTA. This meant that the January 1, 2025 compliance deadline for filing a beneficial ownership information form was temporarily halted.
On December 23, 2024 the Fifth Circuit Court of Appeals granted the Department of Justice’s emergency motion for a stay of the district court’s preliminary injunction, thereby reinstating the filing requirements, but extending the filing deadline from January 1, 2025, to January 13, 2025.
On December 26, 2024, the Fifth Circuit changed course and vacated its own stay of the injunction while it considers the parties’ arguments on appeal.
On January 23, 2025 the U.S. Supreme Court handed down an order staying the nationwide injunction, effectively putting the CTA back into effect.
However, in spite of the Supreme Court’s ruling, on January 24, 2025, FinCEN said that the beneficial ownership information form remains voluntary at this time pending the final outcome of the litigation.
What does this mean for companies subject to the CTA? At this point, companies do NOT have to file pending the outcome of the appeal. More information is available at www.fincen.gov/boi.
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