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A federal judge’s Dec. 3 injunction against the Corporate Transparency Act (CTA) halted the landmark anti-money-laundering program just weeks ahead of its first filing deadline.
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) began accepting Beneficial Ownership Information Reports on January 1 of this year, and gave companies that existed before that date through the end of 2024 to file them. Companies that were formed this year had “90 calendar days to file after receiving actual or public notice that their company’s creation or registration is effective,” a FinCEN press release said.
Now, that requirement’s been put on pause. Judge Amos Mazzant of the Eastern District of Texas said the CTA violates the federalist system by giving the feds the power to “monitor companies created under state law” and to end anonymous corporate ownership in states that have allowed it. Two days later, the government filed its notice of appeal to the Fifth Circuit.
While federal attorneys prepare for that appeals case, their colleagues are waiting for a decision in their appeal of a ruling on the CTA from an Alabama district judge. That judge’s March decision paused the reporting requirement for members of business league National Small Business United, which brought the suit.
What it means for CFOs. You don’t have to report—for now, at least. “In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information,” according to FinCEN’s website. Your company will “not [be] subject to liability if they fail to do so while the order remains in force.” That said, FinCEN is happy to accept your voluntary filing.
Even though businesses don’t have to file, accountants with clients subject to the now-paused requirements should still “gather the required information from the clients and [be] prepared to file the BOI report if the injunction is lifted,” the AICPA said in a statement, according to the Journal of Accountancy.
Will there be a reversal? While the DOJ has filed an appeal, it’s unclear whether the incoming Trump administration will support it. Trump opposed the December 2020 defense-spending package that the CTA was tacked onto, but for reasons unrelated to the CTA.
Happy/Unhappy holidays! The National Federation of Independent Business, one of the plaintiffs in the suit, said the injunction against “illegally impose[d] burdensome requirements on small businesses” was “an early holiday gift to Main Street.”
Ian Gary, head of the Financial Accountability and Corporate Transparency (FACT) Coalition, also described the ruling as a present, though of a different sort. “This wrong-headed injunction is a Christmas gift to criminals who use anonymous shell companies to traffic fentanyl, exploit people, and hide dirty money,” he said in a press release.