The Corporate Transparency Act (CTA) is an important law designed to keep financial systems safe from threats like terrorism financing, drug trafficking, and money laundering. It’s also a way to ensure that small, law-abiding businesses across the country are on a level playing field. But a recent federal court decision has hit the pause button on enforcing these—at least for now.
Overview
A recent federal court decision has temporarily halted the enforcement of the Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) reporting requirements. This means reporting companies are not currently required to file their BOI reports with the Financial Crimes Enforcement Network (FinCEN). However, businesses can still voluntarily submit their BOI reports if they choose to do so.
Tax1099 continues to accept Beneficial Ownership Information (BOI) reports for businesses choosing to file voluntarily during the suspension period.
Here’s what this means for businesses and what to expect moving forward.
Overview of the Corporate Transparency Act
The Corporate Transparency Act was introduced to combat financial crimes like money laundering and terrorism financing by requiring most legal entities in the United States to disclose their beneficial ownership information. FinCEN’s BOI Reporting Rule, created to enforce the CTA, set a compliance deadline of January 1, 2025, for businesses formed before January 1, 2024.
Court Order Temporarily Halts CTA Enforcement
On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction in the case Texas Top Cop Shop, Inc., et al. v. Garland, et al.. This order:
- Prevents enforcement of the CTA, including its Beneficial Ownership Information (BOI) reporting requirements.
- Pauses all deadlines for BOI reporting compliance.
The Department of Justice has filed an appeal against this ruling as of December 5, 2024.
What Businesses Should Know?
In compliance with the court’s decision, FinCEN has announced:
- Businesses are not currently required to file BOI reports.
- No penalties will be imposed for non-compliance during this period.
- Businesses may still submit BOI reports voluntarily if they wish.
While the CTA remains on hold, businesses are temporarily relieved of their BOI reporting obligations. However, as the legal process continues, requirements may change. Staying informed is critical to ensuring compliance if the injunction is lifted.
If you choose to file BOI reports during the injunction, Tax1099 is here to assist you with the process.
