Corporate Transparency Act Rollercoaster Ride Continues

The U.S. Supreme Court overturned a lower court order blocking enforcement of the Corporate Transparency Act Jan. 23, further extending uncertainty about the law’s future.
Supreme Court justices placed on hold the nationwide injunction issued Dec. 3 by Texas-based U.S. District Judge Amos Mazzant.
Despite the court’s ruling, implementation of the law continues to be suspended as a separate national injunction issued Jan. 7 by a federal judge remains in place.
The injunction was sought by the National Federation of Independent Business, which joined several small businesses in challenging the law.
Mazzant had ruled that Congress overstepped its powers under the U.S. Constitution in passing the Corporate Transparency Act in 2021.
After Mazzant’s ruling was overturned Dec. 23 by a panel from the U.S. Court of Appeals for the Fifth Circuit, a separate panel of the same court reinstated the injunction three days later.
Reporting Deadlines
The CTA, which took effect Jan. 1, 2024, requires most companies incorporated in—or operating in the U.S.—to report stakeholder information to the U.S. Treasury Department’s Financial Crimes Enforcement Network.
The law was likely to impact approximately 32.6 million small and medium-sized businesses, with compliance costs expected to exceed $22 billion in the first year.
Under the act, covered companies formed or registered to do business prior to Jan. 1, 2024 were required to file initial FinCEN reports by Jan. 1, 2025.
Reporting companies should seek legal counsel regarding compliance with the CTA.
Companies formed or registered during 2024 were required to comply with reporting requirements within 90 days, while companies formed or registered after Jan. 1, 2025 had 30 days to comply.
After the flurry of court action in December, the Treasury Department extended the reporting deadline to Jan. 13, 2025.
Reporting companies should seek legal counsel regarding compliance with the CTA, including consideration of confidentiality obligations if the choice is made to file with FinCEN while legal action continues.
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