Despite a U.S. Supreme Court ruling Thursday in favor of the Corporate Transparency Act, enforcement of the law remains on hold.
The CTA and its beneficial ownership information requirement would force about 32 million small businesses in the U.S. to file information about their owners for face penalties. The bipartisan law passed in 2021 was intended to combat money laundering and terrorist financing by fraudulent businesses. Opponents of the law say its requirements place undue burdens on small businesses.
It was scheduled to go into effect January 1, 2025, before a series of court decisions changed its course.
On December 3, Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas ordered a nationwide injunction that froze enforcement of the law. That injunction was the subject of Thursday’s Supreme Court decision, which granted the Biden administration’s appeal to reinstate the CTA. The Court did not explain its ruling.
However, in a separate ruling on January 7, Judge Jeremy Kernodle – also of the Eastern District of Texas – issued his own nationwide injunction that also blocks enforcement of the CTA. That ruling stands and has not yet been appealed by the government.
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN), which would oversee implementation of the law, said companies and trusts aren’t currently obligated to file BOI reports and will not face penalties while the injunction is in place. To avoid potential deadlines if the law is ruled enforceable, companies can voluntarily file BOI reports now.
Filing is free, and BOI forms and resources are available online from FinCEN.
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