The 5th U.S. Circuit Court of Appeals lifted a nationwide preliminary injunction yesterday on the enforcement of the Corporate Transparency Act (CTA), stating that the government likely is to prevail in a constitutional challenge. This decision effectively reverses the court order from the Eastern District of Texas and places many small businesses in jeopardy that have not yet filed beneficial ownership information with the Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Department of the Treasury.
In light of the 5th Circuit’s decision, FinCEN announced it will delay enforcement of CTA until January 13, 2025—just three weeks from now. This delay does not allow enough time for millions of small businesses to comply with the law, and it is deeply concerning that FinCEN will proceed with enforcing this law when it has failed to give adequate notice and instructions to law-abiding family business owners.
“The Corporate Transparency Act requires millions of family farmers and ranchers to file complex paperwork and disclose beneficial ownership information with the federal government under penalty of severe fines and jailtime,” said NCBA Executive Director of Government Affairs Kent Bacus. “FinCEN should do the right thing and provide a realistic delay to the Corporate Transparency Act until Congress has an opportunity to provide a permanent fix that protects family farmers and ranchers.”
Under CTA, companies with 20 employees or fewer must report information about their “beneficial owners,” or those who own at least 25% of a company, control or make major decisions for a company or receive substantial earnings from a company. Operations such as limited liability companies, corporations or other legal entities that file with the secretary of state could be required to report beneficial ownership information. To access the reporting portal, click here.
As every situation is different, producers should consult their attorney and/or tax professional to determine how CTA impacts their operation. NCBA will continue to monitor FinCEN for further notices on enforcement and will seek a further delay in the filing deadline in light of the recent development and increased confusion among business owners.