SMALL BUSINESS ADVISORY: Corporate Transparency Act
UPDATE: Corporate Transparency Act Requirements Halted by Federal Court
Update on the Corporate Transparency Act from our partners at the U.S. Chamber of Commerce
Unless and until an appellate court overrules or narrows the injunction, no small businesses are obligated to comply with the reporting requirements.
A federal court in Texas halted the implementation of the Corporate Transparency Act’s (CTA) beneficial ownership reporting requirements. Holding that the CTA is likely unconstitutional, the court issued a preliminary injunction barring the government from enforcing the CTA and its reporting requirements against anyone.
Prior to the ruling, small businesses that met certain criteria would have had to file reports with the Department of the Treasury by January 1, 2025, or risk fines and criminal penalties.
The preliminary relief will remain in effect until the conclusion of legal proceedings, at which point the court may enter a permanent injunction. In the meantime, the government will likely appeal the preliminary injunction.
Unless and until an appellate court overrules or narrows the injunction, no businesses are obligated to comply with the reporting requirements.
The following information is brought to you in partnership with the U.S. Chamber of Commerce.
WHAT IS THE CORPORATE TRANSPARENCY ACT?
The Corporate Transparency Act (CTA) was enacted in 2021 to combat illicit activity including tax fraud, money laundering, and financing for terrorism by capturing more ownership information for specific U.S. businesses operating in or accessing the country’s market. Under the new legislation, businesses that meet certain criteria must submit a Beneficial Owner Information Report (BOIR) to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). This report provides details identifying individuals who are associated with the reporting company.
WHEN IS THE DEADLINE AND ARE THERE PENALTIES?
For most eligible businesses, the filing deadline is January 1, 2025. Those who fail to file by this deadline — or fail to update this information if needed — could face up to two years imprisonment and fines up to $10,000, in addition to civil penalties of up to $591 per day.
WHAT BUSINESSES MUST REPORT?
A reporting company for the purposes of the BOIR is:
- A for-profit, privately held company registered to conduct business in the U.S.
- Has 20 or fewer employees or has $5 million or less in gross sales receipts.
- There are 23 exemptions.  CLICK HERE to find out if your business is exempt.
HOW DO I FILE MY BENEFICIAL OWNER INFORMATION REPORT (BOIR)?
CLICK HERE to download a step-by-step guide to filing your company’s report.
STILL HAVE QUESTIONS/WONDERING ABOUT BENEFICIAL OWNERSHIP?
Check out this FAQ sheet from the U.S. Treasury Financial Crimes Enforcement Network HERE.