ALERT!

Corporate Transparency Act (CTA) is Off-Again:
Update as of January 7, 2025

As reported in the MCAC 4Q 2024 newsletter Issues on the Radar 2024: Year End Report, this issue remains a moving target with updates, literally, coming in days apart.

Key takeaways:

  • CTA applies to businesses with fewer than 20 employees and less than $5 million in annual revenue including corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States. (Tip: Take an exemption test in the Small Business Compliance Guide if you are unsure whether your business is a reporting company. See page 19 – Exemption 21.)
  • Original effective date Jan 1, 2025
  • Companies with CTA reporting requirements are not currently required to file beneficial ownership information with FinCEN, as a result of nationwide preliminary injunction issued December 26.
  • Department of Justice has asked Supreme Court to stay nationwide injunction pending determination CTA’s constitutionality by Fifth Circuit.
  • FinCEN will continue to accept voluntary beneficial ownership submissions for reporting companies that choose to file.
  • Given uncertainty surrounding CTA, companies should continue to monitor obligations and reporting requirements and be prepared to file BOIRs with FinCEN in the event enforcement is again resumed.
  • If enforcement is resumed, the current reporting deadline for most reporting companies will be January 13, 2025.

What is the CTA?
Enacted by the U.S. Treasury in 2021, the CTA is aimed at cutting down on fraud, money laundering and terrorism funding that can run through anonymous business entities. The CTA mandates filing of Beneficial Ownership Information Reports (BOIR). Businesses filing a BOIR are required to disclose details about their beneficial owners, such as:

  • Full legal name
  • Date of birth
  • Current residential or business address
  • Unique identification number (e.g., passport or driver’s license)

Who is Affected?
Starting Jan. 1, 2025, businesses with fewer than 20 employees and less than $5 million in annual revenue were required to report ownership and control information to the federal government every year – more specifically to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN).

Who is a Beneficial Owner?
A beneficial owner is an individual who either directly or indirectly:
(1) exercises substantial control over the reporting company, or
(2) owns or controls at least 25% of the reporting company’s ownership interests

The CTA has been the subject of contention in the court system which has made it an on again / off-again proposition for nearly 32 million businesses across the United States.

Late Dec. 26, 2024, the Fifth Circuit merits panel reinstituted a preliminary injunction against the enforcement of the CTA. Therefore, as of Dec. 27, 2024, there is no requirement or deadline to file a company BOI report pursuant to the CTA.

But, stay tuned…

Supplemental Resources:

This bulletin brought to you in part by MCAC Mission Partner, Angelus Block.

Angelus Block

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