Corporate Transparency Act – What You Need to Know

CTA Overview

We wanted to provide you with recent updates on the Corporate Transparency Act (“CTA”).  Under the CTA, FinCEN (the “Financial Crimes Enforcement Network of the U.S. Treasury”) is required to develop a nationwide database of private company “beneficial owners”. The CTA requires every company in the U.S. to file beneficial ownership information (BOI) reports with FinCEN. Most of these initial reports are due by January 1, 2025.

Recent Update

On December 3, 2024, a Federal District Court in Texas issued a nationwide preliminary injunction against the CTA. This injunction temporarily blocks enforcement of the CTA and its reporting rule on the basis that the CTA and the reporting rule likely violate constitutional protections.

What Does this Mean for You?

This means that owners do not have to comply with the CTA at this time. However, this decision is not final. This ruling temporarily halts enforcement while the case proceeds. Enforcement may resume if the Court’s order is overturned on appeal or if the Government ultimately prevails in the case.

What Should I Do?

At this time, we recommend proceeding with filing the BOI before January 1, 2025.Legal proceedings could reverse the court’s decision and reinstate compliance requirements. Companies that do not meet the deadline should be prepared to comply promptly if the injunction is overturned. If you would like our Firm’s assistance with preparing and filing the BOI, please reply to [email protected] or contact your Mavacy attorney directly.

The situation remains subject to change, and we will keep you updated as new developments arise.