Our latest podcast features attorneys Jacob Rich and Jeffrey Leonard discussing the confusion surrounding the Corporate Transparency Act (CTA) – and, more importantly, what all those changes mean for small business owners.
Since it was first passed, there has been a dramatic political shift that has changed how the law will be applied. Just as Jacob Rich said, keeping up with these changes is like an episode of “Days of Our Laws,” thanks to its soap opera-style twists.
What Is the Corporate Transparency Act?
The Corporate Transparency Act was originally designed to help protect companies by requiring businesses to report information about beneficial owners – that is, the individual or individuals who control those businesses.
Originally, it was intended to take effect in early 2025, but political changes have thrown the implementation of the law into chaos, leaving business owners puzzled about their obligations..
What’s Happened So Far?
2021: The CTA is enacted as part of the National Defense Authorization Act.
January 2024: Existing entities formed before this date are given until January 1, 2025, to comply, while new entities have 30 days post-formation to file.
Early December 2024: A federal court in Texas issues a nationwide injunction, which halts CTA enforcement. By the end of the month, the Fifth Circuit Court of Appeals lifts the injunction.
Late December 2024: A different panel of the Fifth Circuit reinstates the injunction, pausing enforcement once again.
January 2025: The U.S. Supreme Court stays the injunction, allowing CTA enforcement to proceed.
February 2025: FinCEN announces it will not enforce penalties for non-compliance until a forthcoming interim final rule is issued.
Latest Twist: Foreign Companies Only?
In a recent development, the U.S. Treasury Department announced it would not enforce CTA requirements for U.S.-based companies, at least for now. Instead, the focus would be on foreign companies doing business in the U.S. However, this isn’t yet codified into law.
At the same time, a bipartisan bill passed unanimously in the House would delay CTA implementation by one year. The Senate hasn’t voted yet, but there is overwhelming support from both parties.
What Should Business Owners Do Now?
Many business owners are wondering about their safest course of action. Jacob and Jeff recommend filing. Complying with CTA now means that your business will be covered if enforcement resumes.
Why file now if the government might not enforce the law? Because not filing is a bet that the current non-enforcement stance will last – and that’s a risky bet. The CTA is still law, and a future administration could enforce it strictly.
Keep Your Finger on the Pulse
Some business owners, understandably, are considering holding off on filing until there’s more certainty. If you’d rather “wait and see,” we recommend that you:
Keep a close watch on official updates: Monitor news from the Treasury Department, FinCEN, and Congress.
Stay in touch with your attorney: Regular legal counsel will help you understand any shifts and what they mean for your business.
Be prepared to file quickly: Have your beneficial ownership information gathered so you can file at a moment’s notice.
Remember, not filing now does not mean you’re off the hook forever. It just means you’re assuming the risk and responsibility of monitoring the situation.
Plan Ahead with CPMT
In this ever-changing environment, proactive planning is key.
Contact CPMT Law for guidance on your CTA compliance. We’re closely tracking legal changes and can help you protect your business.
Don’t get caught off guard—reach out to CPMT Law today.