Beneficial Ownership Information Reporting Requirements? December 2024 UPDATE

by Matthew Senter | Dec 5, 2024 | Tax

Federal Court Blocks Enforcement of Corporate Transparency Act

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction, halting the enforcement of the Corporate Transparency Act (CTA). The court determined that the plaintiffs successfully demonstrated that the law likely violates both the 1st and 4th Amendments of the U.S. Constitution. This ruling comes just weeks before the January 1, 2025 deadline, when millions of small businesses were set to make their first filings under the CTA.

Key Points of the Court’s Ruling:

This is not a final decision. The court’s order prohibits the enforcement of both the CTA and the related rules adopted by the Financial Crimes Enforcement Network (FinCEN). As a result, companies are not required to meet the January 1, 2025 deadline for submitting beneficial ownership reports at this time.

What This Means for Senter CPA Clients:

Temporary Relief, but Potential for Future Changes: While small business owners are not required to comply with the CTA right now, this ruling is only the beginning of a likely prolonged legal battle. There is still the possibility that the law will be enforced again if the court’s decision is reversed.
Prepare for Potential Reversal: According to the Michigan Association of CPAs (MICPA), businesses should remain prepared to comply with the CTA if the decision is overturned. If enforcement resumes, the court may grant a grace period for compliance. Additionally, we expect the Treasury Department and FinCEN to issue further guidance in response to this development.
Stay Vigilant About January 1 Deadline: Although the ruling offers temporary relief, business owners should continue to prepare for the January 1, 2025 filing deadline. Given the ongoing uncertainty, it is advisable to proceed with the necessary steps for CTA compliance while awaiting further clarification.

This is a rapidly evolving situation, especially with the January 1 deadline approaching. The impact of the Texas court’s ruling on FinCEN’s filing requirements remains unclear, including whether the deadline will be postponed.

At Senter CPA, we will closely monitor any updates regarding the CTA and keep you informed with the latest information and resources regarding beneficial ownership reporting requirements.

Always remember, Senter, CPA is here for you if you need any assistance.

Don't hesitate to give us a call at 248-934-0550, or contact us below.

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