Since its implementation in early 2024, the Corporate Transparency Act (CTA) has introduced significant new compliance requirements for many U.S. businesses.
Designed to combat financial crimes like money laundering and fraud, the CTA requires most corporations and LLCs to file Beneficial Ownership Information Reports (BOIR). These reports disclose key details about individuals who own or control these entities.
Despite its intentions, the CTA has faced criticism for imposing new burdens on businesses and questions about its constitutionality. In April 2024, a limited injunction temporarily paused the law for certain plaintiffs.
Earlier this month, a federal court ruling in Texas Top Cop Shop, Inc. v. Garland, No. 4:24-cv-478 (E.D. Tex.), found the CTA likely unconstitutional and issued a nationwide preliminary injunction that halts enforcement of the CTA altogether. This development impacts all businesses required to file a BOIR, temporarily suspending compliance deadlines and creating uncertainty about the law’s future.
While this ruling is not final, it effectively halts compliance deadlines for now. Here’s what businesses need to know about this recent ruling and how to navigate the current pause in compliance.
Impact and Exemptions
The court’s decision stems from concerns that the CTA may be unconstitutional. For now, businesses of all types, including those previously required to file a BOIR, are not obligated to meet the reporting deadlines.
Unlike the previous injunction issued in April 2024 in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.), which was limited to the plaintiffs in that case, this month’s injunction applies to all entities across the U.S., not just those directly involved in the lawsuit.
Some exemptions under the original CTA requirements included entities like tax-exempt entities, financial institutions, and large operating businesses. However, as enforcement is suspended, these exemptions are temporarily irrelevant.
Compliance Deadlines and Considerations
Under the original rules, entities formed in 2023 or earlier were required to file a BOIR by January 1, 2025. For entities formed in 2024, the deadline was within 90 days of formation. These deadlines are now on hold.
Since the injunction is preliminary, it’s possible that the BOIR requirement could be reinstated with new deadlines. Businesses should pause compliance efforts for now but remain informed as the case develops. The government has appealed the ruling, but a resolution through the courts is likely still months away.
For businesses, this pause offers breathing room, but staying prepared is wise. We’ll continue to monitor updates and provide guidance as more information becomes available.
Corporate Transparency Act – December 23, 2024 Update
There has been yet another development concerning the Corporate Transparency Act and the Beneficial Ownership Information Report (BOIR) that will require quick action from affected entities.
On December 23, 2024, the United States Court of Appeals for the Fifth Circuit stayed the preliminary injunction on enforcement of the Corporate Transparency Act, which was issued by the United States District Court for the Eastern District of Texas on December 3, 2024. This means that the Beneficial Ownership Information Report (BOIR) requirements are back in effect with extended deadlines.
- Reporting companies that were created or registered prior to January 1, 2024, now have until January 13, 2025 to file their report.
- Reporting companies created or registered after September 4, 2024, have until January 13, 2025 to file their report.
- Reporting companies that were created or registered on or after December 3, 2024 but before December 23, 2024, have an additional 21 days from their original filing deadline to file their report.
We know these rapid changes can be frustrating and disorienting, so please feel free to reach out to our office if you have any questions or would like further clarification on when your report needs to be filed.