Update: Corporate Transparency Act on Hold
The on-again-off-again federal law, which would require most U.S. business entities to provide detailed information on the entity and its “beneficial owners,” is off again.
On Tuesday, December 3, a U.S. District Court judge in Texas issued a nationwide preliminary injunction preventing the federal government from enforcing the Corporate Transparency Act (CTA) and its beneficial ownership reporting requirements.
In its ruling, the court held that the CTA and its implementing regulations, including the reporting requirement, are likely unconstitutional. The injunction provides preliminary relief until the conclusion of legal proceedings.
As a result, businesses are not currently obligated to file Beneficial Ownership Information reports or comply with the CTA.
We emphasize “currently,” because Tuesday’s preliminary injunction is subject to further action by the U.S. District Court, a U.S. Court of Appeals and, perhaps, the U.S. Supreme Court. A final determination of the CTA’s constitutionality could be issued before the end of the year, but that is probably unlikely at this point. For now, though, and until further order of the Court, the reporting requirements under the CTA have been suspended.
Prior to the December 3 injunction, tens of millions of U.S. business entities were required to file reports with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) by January 1, 2025, or face harsh penalties ($500 or more per day for each day past a deadline) and, in some cases, criminal liability (up to $10,000 in fines and up to two years in prison).
AICPA
