Corporate Transparency Act Injunction Lifted: What Businesses Need to Know

In a significant legal development, a federal judge in Texas has lifted the last nationwide injunction blocking the enforcement of the Corporate Transparency Act (CTA)—a 2021 law requiring businesses to disclose their beneficial owners to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN).

With this ruling, the path is now clear for CTA enforcement, but FinCEN has announced a 30-day filing extension to give businesses additional time to comply. Here’s what you need to know and how to prepare.

What is the Corporate Transparency Act?

The Corporate Transparency Act (CTA) was enacted to combat illicit financial activities by increasing transparency in business ownership. It requires corporations, limited liability companies (LLCs), and similar entities to report their beneficial ownership information (BOI) to FinCEN.

The goal? To prevent money laundering, tax evasion, fraud, and the use of anonymous shell companies for criminal activities.

Why was the CTA previously Blocked?

Legal challenges delayed the enforcement of the CTA. A federal court issued an injunction to prevent FinCEN from enforcing the reporting requirements.

However, the U.S. Supreme Court later stayed a similar injunction, signaling that the law had a legal basis. Now, the Texas judge’s decision to lift the final injunction paves the way for full enforcement.

What the 30-Day Extension Means for Businesses

While the injunction is no longer in place, FinCEN has granted a 30-day extension for businesses to comply with their reporting requirements.

FinCEN also indicated it will evaluate potential modifications to reporting rules, particularly for low-risk entities, to minimize unnecessary burdens while keeping high-risk entities in focus.

What Businesses Need to Do Next?

With the CTA now moving forward, business owners must act quickly to comply with the new requirements. Here’s what you need to do:

1. Determine If Your Business Needs to File

• Most LLCs, corporations, and similar entities formed or registered in the U.S. must report beneficial ownership information to FinCEN.

• Certain entities, such as publicly traded companies and regulated financial institutions, may be exempt.

2. Understand Who Qualifies as a Beneficial Owner

• A beneficial owner is any individual who directly or indirectly owns or controls at least 25% of the company or has significant control over business decisions.

3. Gather the Required Information

• Entities must submit details on each beneficial owner, including:

• Full legal name

• Date of birth

• Current address

• A unique identifying number (e.g., passport or driver’s license)

4. Submit Your Report to FinCEN

• FinCEN has a new online filing system for CTA compliance.

• Businesses should submit their reports as soon as possible to avoid penalties.

5. Consult a Legal or Financial Advisor

• If you’re unsure about your obligations, seek professional guidance. You can reach out to info@MooreLegalCounsel.com or Jmoore@Princelaw.com to get started!

• Failing to comply can result in severe penalties, including civil fines and potential criminal charges.

Now that the injunction has been lifted, the Corporate Transparency Act is officially in effect. Businesses should use the 30-day extension wisely to ensure compliance and avoid fines.

If you’re unsure whether your business needs to report or how to file, now is the time to act. Consulting with a legal or financial professional can help you navigate this process with confidence.

• Need help with CTA compliance? Contact a business law expert today!

• Email at: info@moorelegalcounsel.com or Jmoore@Princelaw.com to get started!

*Article cites to information originally reported at: BOI injunction lifted; FinCEN promises 30-day filing delay