ALERT!
Corporate Transparency Act (CTA) is On-Again:
Update as of Feb 20, 2025
A February 18, 2025 decision by the U.S. District Court for the Eastern District of Texas means that beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) are once again back in effect.
For the vast majority of reporting companies, the new deadline to file an initial, updated, and/ or corrected BOI report is now March 21, 2025. See FinCEN Notice, FIN-2025-CTA1, 2/18/2025.
As previously reported in our January 7 Alert and the MCAC 4Q 2024 newsletter Issues on the Radar 2024: Year End Report (pg 5), this issue remains a moving target.
Key Takeaways-Guidance for Employers:
- Businesses with CTA reporting requirements should monitor the situation closely and file beneficial ownership information reports by March 21, 2025.
- Reporting companies can report their beneficial ownership information directly to U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN), free of charge, using FinCEN’s E-Filing system available at https://boiefiling.fincen.gov. More information is available at fincen.gov/boi.
- Congress is also working the issue through potential legislation to delay the reporting deadlines by a year. The House last week unanimously passed legislation, H.R. 736, that would delay the CTA reporting requirements until January 1, 2026. In the Senate, a group of Republicans introduced a companion bill (S.505).
- Meanwhile, the Trump administration has continued to defend the CTA in court. Reports are circulating that the administration could revise the rules to reduce the compliance burden for “lower-risk entities, including many U.S. small businesses.” But there is no more clarity than comments.
- For now, CTA filing requirements are reinstated. Affected businesses should file by March 21, 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?
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.)
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 remains the subject of contention in the court system and is also in Congressional crosshairs which males it an on-again / off-again proposition for nearly 32 million businesses across the United States.
We continue to monitor the issue and will keep MCAC members updated.
BACKGROUND:
- January 1, 2025 – Original effective date. MCAC 4Q 2024 Newsletter: Issues on the Radar 2024
- January 7, 2025 – Fifth Circuit merits panel reinstituted a preliminary injunction against the enforcement of the CTA. MCAC Alert
- February 5, 2025 – U.S. Department of Justice—on behalf of Treasury—filed notice of appeal of the district court’s order and requested stay of the order during the appeal.
- February 18, 2025 – Court agreed to stay its January 7, 2025 order until appeal is completed. Given this decision, BOI reporting requirements of the CTA are no longer stayed and BOI reporting is now mandatory. FinCEN is providing additional time for companies to report, thus the March 21 deadline.
Supplemental Resources:
This bulletin brought to you in part by MCAC Mission Partner, Angelus Block.
MCAC is the “411” center for mason contractors on legislation, regulations, safety issues, and building codes.