The new Corporate Transparency Act (CTA), requiring businesses to file a Beneficial Ownership Information (BOI) report identifying their key stakeholders and executives, is back in effect. The new filing deadline is January 13, 2025.
Yesterday, December 23, 2024, a federal Court of Appeals lifted the previous order blocking the enforcement of the CTA, reinstating the law in full effect.
Meant as an anti-money laundering measure, the CTA requires most business entities to file a BOI report with the Department of the Treasury’s Financial Crimes Enforcement Network, disclosing information on their beneficial owners. Failure to comply may result in heavy fines and imprisonment.
More information on which businesses are required to file, who is considered a beneficial owner, and what should be included in the report can be found here.
Congress passed the Corporate Transparency Act on January 1, 2021, with an effective date of January 1, 2024 for domestic companies created or registered beginning that date and a filing deadline of January 1, 2025 for older companies.
But three weeks ago, on December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against the enforcement of the CTA.
It was not the first time the CTA had been challenged, but it was the first time a nationwide injunction has been issued. The Texas court held that that the CTA exceeds the U.S. Congress’s powers, under both the Commerce Clause and the Necessary and Proper Clause.
The U.S. Department of Justice filed an appeal in response, which was granted quickly. The New Orleans-based 5th U.S. Circuit Court of Appeals lifted the injunction, ruling that the CTA is in the "public's urgent interest in combating financial crime and protecting our country's national security."
However, given the revolving door of the law's status and the confusion it's created, the reporting deadline has been extended from January 1, 2025 to January 13, 2025.
Business owners and executives should begin compiling a comprehensive and accurate BOI report as soon as possible and submit it by the Jan. 13 deadline at the latest.
For any questions or assistance, contact us.
Katherin Valdez-Lazo is an associate in Vishnick McGovern Milizio LLP’s Business and Transactional Law practice group, including the Mergers and Acquisitions and Commercial Real Estate practices. She can be reached at kvaldez-lazo@vmmlegal.com and 516.437.4385 x143.
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