by Chris Farmer, NFDA Legal Counsel

As promised, we have been keeping an eye on challenges to the Corporate Transparency Act (CTA) as it makes it way through the courts.

On December 23, the Fifth Circuit Court of Appeals lifted the Eastern District of Texas Court’s nationwide preliminary injunction against enforcement of the CTA. As a result, the following CTA deadlines are once again enforceable against reporting companies:

In response to this ruling, the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) extended the deadline for companies

What is the Corporate Transparency Act?

The Corporate Transparency Act, which was enacted in 2021 with the intent of curbing illicit finance, requires many companies doing business in the United States to report information about the individuals who ultimately own or control them. “Corporate anonymity enables money laundering, drug trafficking, terrorism, and corruption. It harms American citizens and puts law-abiding small businesses at a disadvantage. Having a centralized database of beneficial ownership information will eliminate critical vulnerabilities in our financial system and allow us to tackle the scourge of illicit finance enabled by opaque corporate structures,” said Secretary of the Treasury Janet L. Yellen. 

What Does the CTA Require?

The CTA's Beneficial Ownership Information reporting rule, requires small businesses to register with FinCEN and provide four pieces of information about each beneficial owner:

• The company's full legal name;
• Its business address (P.O. boxes or lawyers' offices aren't accepted);
• The state where the company was formed or first registered;
• A taxpayer identification number and an identity document, such as a filed Articles of Incorporation;
• Beneficial owners' full legal names and birth dates;
• Beneficial owners' home addresses;
• A photocopy of beneficial owners' U.S. driver's license or passport.

Beneficial ownership information reporting only needs to be submitted once and is not a yearly requirement unless the information needs to be updated or corrected information.

By When Must Filing Be Made?

Companies that are required to comply (“reporting companies”) must file their initial reports by the following deadlines:

• Existing companies: Reporting companies created or registered to do business in the United States before December 23, 2024, must file by January 13, 2025.
• Newly created or registered companies: Reporting companies created or registered to do business in the United States in 2024 have 90 calendar days to file after receiving actual or public notice that their company’s creation or registration is effective.
• Reporting companies that qualify for disaster relief and already have extended deadlines that fall beyond January 13, 2025, are instructed to abide by whichever deadline falls later.
• FinCEN did not extend the deadline for new companies formed on or after January 1, 2025. These reporting companies still must file their initial BOI reports within 30 days after formation. Additionally, reporting companies should note the following reporting obligations:

Which Businesses Must File?

Almost all companies in the United States will need to file.

There are 23 types of businesses that are exempt from the beneficial ownership information filing. These include many publicly traded companies and nonprofits, as well as some large operating companies. Many types of banks and other financial services businesses don't need to file. Some other types of businesses, such as many sole proprietorships, are also exempt, it noted. 

Should I File Now, Or Will There Be Another Stay?

While there is always a chance there could be another stay pushing off the deadline to file, based on the fact that the new filing deadline is only 20 days away, I recommend going ahead and filing in advance of the deadline. You should not wait until the last minute in case there is additional information you need to gather or there are problems with the online filing system.

Click here for more information on the who, what, and how of filing.