December 27, 2024

On December 23, 2024, the 5th Circuit Court of Appeals reinstated the Corporate Transparency Act (CTA), bringing back reporting requirements for many businesses. Initially paused by a lower court’s ruling earlier in the month, the CTA is now in effect, with FinCEN setting a new compliance deadline of January 13, 2025.

Whether you’re a small business owner or managing a larger entity, here’s what this means for you and how to prepare.

What Is the CTA?

The Corporate Transparency Act, passed in 2021, aims to prevent money laundering and financial crimes by requiring businesses to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). Essentially, this law ensures transparency by identifying the individuals who own or control businesses.

If your company is subject to the CTA, you’ll need to file specific information about your ownership and control structure.

Why Was the CTA Paused – and Then Reinstated?

In early December 2024, a federal court in Texas ruled that the CTA exceeded Congress’s authority and issued a nationwide injunction halting its enforcement. However, on December 23, the 5th Circuit Court of Appeals lifted this injunction, reasoning that the law serves the public’s urgent interest in combating financial crimes and enhancing national security.

The case isn’t over yet, as appeals are ongoing, but the CTA is back in effect for now.

Who Needs to Comply?

Not every business is subject to the CTA. While many companies are required to report, there are 23 exemptions, including:

• Tax-exempt nonprofits
• Highly regulated entities like banks and insurance companies
• Larger businesses meeting certain criteria

If you’re unsure whether your business is exempt, consult an expert or refer to FinCEN’s resources for clarification.

What Information Needs to Be Reported?

If your business is required to comply, you’ll need to file a Beneficial Ownership Information (BOI) Report with FinCEN. This report includes details such as:

1. Your Beneficial Owners:
   • Full name
   • Date of birth
   • Residential address
   • A government-issued identification number (e.g., driver’s license or passport)
2. Your Business:
   Legal name
   • Any trade names or “doing business as” (DBA) names
   • Principal business address
   • Jurisdiction of formation or registration
   • Taxpayer Identification Number (TIN)

What Are the New Deadlines?

Here’s a breakdown of the updated deadlines based on your business’s creation date:

• Before January 1, 2024: File by January 13, 2025.
• Between September 4, 2024, and December 23, 2024: File by January 13, 2025, or within 21 days of your original deadline if applicable.
• On or after January 1, 2025: File within 30 days of receiving notice that your business is officially registered.

Businesses eligible for disaster relief may qualify for extended deadlines.

What Happens If You Don’t Comply?

Non-compliance with the CTA can result in serious penalties:

• Civil fines up to $591 per day for late or incomplete filings.
• Criminal penalties including up to two years in prison and fines of up to $10,000.

3 Steps to Prepare

1. Determine If Your Business Needs to Report
   Review the exemptions to see if your company qualifies. If not, you’ll need to file a BOI report.
   
2. Gather Required Information
   Start collecting the necessary details about your business and beneficial owners to avoid last-minute scrambling.        
3. Meet the Deadline                                                                                                                  Mark your calendar for January 13, 2025, or confirm your specific deadline based on your business’s creation date.

What’s Next?

The legal battle over the CTA is ongoing, and it could take months—or even years—for the courts to issue a final decision. Meanwhile, the reporting deadlines remain in place, so it’s critical to ensure compliance now.

If you’re unsure about how the CTA applies to your business or need help preparing your report, contact us today for guidance.

CONTACT US!

This blog is our way of making sure you’re clued in and feeling good about this big life shift, with a helping hand from our team. Remember, we’re here to turn the legal jargon into something you can not only understand but use to empower your family. And, while we’re here to guide you through the legal landscape, remember this blog is for general information purposes and not a substitute for legal advice tailored to your unique situation