There have been significant developments regarding the Corporate Transparency Act (CTA) that you need to know about. Whether you own a business or serve as a manager, director, or partner, these updates are crucial.
What Happened?
Earlier this month, a federal judge in Texas issued a nationwide preliminary injunction temporarily blocking enforcement of the CTA. This was in response to a lawsuit where plaintiffs argued that the CTA imposed unconstitutional burdens on small businesses.
On Monday, December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit overturned that injunction, temporarily reinstating enforcement of the CTA. However, just days later on December 26, 2024, a different panel of the same court reinstated the nationwide injunction. This ruling pauses enforcement of the CTA once again while the court considers the broader constitutional arguments about the law.
What Are the Deadlines?
Before the court reinstated the injunction on Thursday, December 26th, FinCEN had announced new deadlines due to the temporary injunction:
Businesses created before January 1, 2024: File by January 13, 2025 (originally January 1, 2025).
Businesses created between December 3, 2024, and December 23, 2024: File within 21 days of your original deadline.
Businesses created on or after January 1, 2025: File within 30 days of registration.
Who Needs to File?
The objective of the CTA is to obtain and understand who the legal owner is down to the individual who controls the company to prevent money laundering, tax evasions & illegal activity. Entities that need to file are LPs, LLCs (including single member LLCs), and Corporations. The beneficial owner is the person who directly or indirectly exercises “substantial control” and/or owns or controls 25% or more of the entity. Directors (of Corporations), Managers (of LLCs), General Partners (of Limited Partnerships), etc. are required to file as well.
What Does This Mean for Businesses?
At this time, enforcement of the CTA is on hold, and businesses are not required to meet the January 13, 2025, filing deadline for submitting their beneficial ownership information (BOI) reports to the Financial Crimes Enforcement Network (FinCEN). This temporary pause gives companies more time to prepare and evaluate their compliance strategies, pending further developments in the case.
However, it is important to stay informed. If the injunction is lifted again, businesses may face tight deadlines to file their BOI reports.
How to File
If you’re unsure how to proceed and would like to go ahead submit your BOI report we can handle your filing for you! Simply contact our office at 760-448-2220 or [email protected] and we will be happy to assist you.
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