On December 23, 2024, the Fifth Circuit Court of Appeals overturned a nationwide injunction that had temporarily paused the enforcement of the Corporate Transparency Act (CTA). Effective immediately, the CTA’s beneficial ownership reporting requirements are back in place and the court ruling reinstated the December 31, 2024, filing deadline.
However, due to the confusion caused by the now-overturned injunction, FinCEN has announced a 2-week extension of the deadline to January 13, 2025.
You can comply without stressing over the holidays that you will get a bill January 1st for $591 per day.
What is the Corporate Transparency Act (CTA)?
The CTA is a significant piece of legislation aimed at combating money laundering and enhancing financial transparency. It requires certain entities to disclose their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). This information helps law enforcement agencies track illegal activities such as fraud and corruption.
The Recent Legal Developments
Earlier this month, on December 3, the U.S. District Court for the Eastern District of Texas issued a nationwide injunction that halted the enforcement of the CTA. However, the government successfully appealed the decision, and the Fifth Circuit granted a stay on December 23, effectively reinstating the reporting requirements.
Key Implications for Companies
- Immediate Compliance Required: The Fifth Circuit’s decision did not alter the December 31, 2024, reporting deadline. Companies that are subject to the CTA must file their Beneficial Ownership Information (BOI) reports without delay.
- No Guidance from FinCEN Yet: FinCEN, the agency requiring the reports, itself extended the deadline to January 13, 2025.
- Reinforced Legal Obligation: The reinstatement underscores the importance of compliance. Failing to meet the reporting requirements could result in penalties, including fines and criminal charges.
Steps for Companies to Ensure Compliance
- Determine Applicability: Not all entities are subject to the CTA. Exemptions include large companies, publicly traded corporations, and certain regulated entities. Consult legal counsel to determine if your organization must report.
- Gather Required Information: Prepare the following details for each beneficial owner:
- Full name
- Date of birth
- Address
- Unique identifying number from a government-issued document (e.g., passport or driver’s license).
- File Before the Deadline: Submit your BOI report to FinCEN by January 13, 2025. Early filing is advisable to avoid last-minute issues.
- Monitor for Updates: Stay informed of any additional guidance or changes from FinCEN that may impact the reporting process.
Looking Ahead
The reinstatement of the CTA reporting requirements highlights the government’s commitment to financial transparency and anti-corruption efforts. While the legal challenges to the CTA may continue, companies should prioritize compliance to mitigate potential risks.
As this situation evolves, it is crucial to remain vigilant and proactive. Consulting with legal and compliance experts can help ensure your company adheres to the CTA’s requirements and avoids penalties. The January 13 deadline is firm, so act promptly to fulfill your obligations under the law.
Visit our FinCEN Compliance Service Page to ensure your practice remains compliant and avoid costly penalties.