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Ruder Ware’s CTA compliance lawyers are closely monitoring the ongoing developments related to the Corporate Transparency Act. Here are the key updates we’ve noted:
On December 27, 2024, the U.S. Court of Appeals for the Fifth Circuit has once again vacated enforcementof the Corporate Transparency Act (CTA) and its reporting requirements.
On December 23, 2024, the Fifth Circuit Court of Appeals granted the U.S. Government’s motion for an emergency stay of the nationwide CTA injunction.
On December 5, 2024, the U.S. Government appealed the federal judge’s order temporarily blocking the enforcement of the Corporate Transparency Act (CTA).
On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction, temporarily suspending the enforcement of the Corporate Transparency Act (CTA).
What Should Businesses Do Now?
Stay Informed: Monitor updates on the CTA’s status, as future court decisions or legislative actions could alter current obligations.
Be Ready to Act: If the suspension is overturned, be ready to act swiftly in gathering beneficial ownership information to ensure compliance if reporting requirements are reinstated.
Consult Professionals: Engage with legal and compliance experts to understand how these developments impact your specific situation and to receive guidance on potential future requirements.
We are closely following this situation and will provide updates as more information becomes available.
For personalized advice, please contact our team at cta@ruderware.com.
Entities are now required to report personal information to the federal government pursuant to the Corporate Transparency Act (the “CTA”).
To avoid civil and criminal penalties for noncompliance, over one hundred thousand entities have filed beneficial ownership information reports (“BOIR”) to the Financial Crimes Enforcement Network (“FinCEN”) as of April 1, 2024. Although this filing total is significant, many entities have not yet filed and are hearing about the CTA for the first time.
What is the Corporate Transparency Act?
Effective as of January 1, 2024, the CTA requires “beneficial owners” of “reporting companies” to disclose personal information to FinCEN. These disclosures are meant to combat financial crimes, money laundering, and terrorism financing by enhancing transparency in corporate ownership structures.
For reporting companies formed prior to January 1, 2024, the reporting company has until the end of the year to file its BOIR. For reporting companies formed on or after January 1, 2024, the reporting company has 90 days from its formation to file its BOIR. Starting in 2025, this 90-day filing window will be reduced to 30 days.
Is my entity a “Reporting Company”?
As a general rule, if your entity was formed by filing a document with a government office, it is a “reporting company” and must comply with the CTA requirements. There are, however, exemptions to this general rule. For instance, banks, credit unions, insurance companies, and certain types of tax-exempt entities likely qualify for an exemption. Additionally, a large operating company is exempt if the entity has over 20 full-time employees and over $5 million in gross receipts or sales.
There are 23 total exemptions for which a reporting company may qualify. If no exemption applies, then your entity must report personal information about each of the entity’s beneficial owners, as defined by the CTA.
What is a Beneficial Ownership Information Report and who are beneficial owners?
A BOIR discloses personal information about the “beneficial owners” of your entity. This defined term is slightly misleading in that a beneficial owner does not need to be an owner of the entity. Instead, a “beneficial owner” is any individual who, directly or indirectly, (1) exercises substantial control over a reporting company or (2) owns or controls at least 25 percent of the ownership interests of the reporting company. Despite the clarity of the second prong, analyzing “substantial control” under the first prong can be challenging given the novelty of the CTA. This, however, may become clearer as more extensive guidance emerges.
What personal information must I disclose?
A beneficial owner is required to disclose several pieces of personal information to FinCEN. Specifically, the required disclosures include the beneficial owner’s first and last name, residential address, and a photo of either their driver’s license or U.S. passport.
In addition to the beneficial owner’s disclosures, the reporting company must disclose information such as its legal name, tax identification number, jurisdiction of formation, and principal address.
Is the Corporate Transparency Act here to stay?
The constitutionality of the CTA has been questioned in the legal field. Nevertheless, as of this writing, the CTA remains a binding law with which reporting companies must comply.
We will continue to monitor filings and rulings with respect to the constitutionality of the CTA and provide updates as they become available.
What resources are there to assist me with compliance?
If you have any questions related to the CTA, please contact Ruder Ware at cta@ruderware.com. Our corporate transaction attorneys are happy to assist you with analyzing your entity’s CTA requirements.
If you’re interested in receiving updates on CTA, you can subscribe here.
On March 21, 2025, FinCEN announced an end to Corporate Transparency Act (CTA) reporting requirements for U.S. citizens and domestic companies. In line with the U.S. Department of Treasury’s announcement earlier this month, FinCEN has issued an interim final rule narrowing the scope of beneficial ownership information (BOI) reporting under the CTA. Under the interim […]
The U.S. Department of the Treasury suspended enforcement of the Corporate Transparency Act (CTA) for U.S. citizens and domestic reporting companies. On Sunday night, the Treasury announced that U.S. citizens and domestic reporting companies will no longer face penalties or fines for failure to report under the CTA. In its announcement, the Treasury stated it […]
The Corporate Transparency Act (CTA) and its reporting requirements are back in effect. This afternoon, a federal district court in Texas granted the U.S. government’s motion to stay (i.e., pause) the nationwide CTA injunction. Based on FinCEN’s most recent alert, FinCEN intends to extend the reporting deadline for all reporting companies to 30 days from […]
The Corporate Transparency Act (CTA) remains on hold due to a nationwide injunction granted by a federal District Court in Texas in Smith v. U.S. Department of the Treasury. However, given pending legal battles and legislative movements under the new administration, the status of the CTA could be facing imminent change. While there are several […]
In an alert posted this morning, FinCEN has announced that reporting companies are not currently required to file beneficial ownership reports even with the U.S. Supreme Court’s order yesterday. Instead of issuing a new deadline for filing reports, FinCEN stated that despite the Supreme Court granting a stay (i.e., pause) of the nationwide block on […]
The Corporate Transparency Act (“CTA”) and its beneficial ownership reporting requirements are back in effect. Earlier today, the U.S. Supreme Court granted the federal government’s request to stay (i.e., pause) the nationwide block on enforcing the CTA. The merits of the CTA are still under review by the 5th Circuit Court of Appeals, with oral […]
The Corporate Transparency Act (“CTA”) has been on a journey this past month with a whirlwind of court rulings: halted by a federal district court, reinstated by the Fifth Circuit’s motions panel, had its reporting deadlines extended by FinCEN, and then halted again by the Fifth Circuit’s merits panel. Amidst all this back-and-forth, predicting what […]
The U.S. Court of Appeals for the Fifth Circuit has once again vacated enforcement of the Corporate Transparency Act (CTA) and its reporting requirements. This latest decision temporarily halts the mandate for entities to disclose beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), reinstating a pause on compliance obligations. The appellate court’s panel […]
FinCEN has extended the reporting deadline for companies created or registered before January 1, 2024, to January 13, 2025. In an alert posted Tuesday night, FinCEN recognized that “reporting companies may need additional time to comply given the period when the preliminary injunction had been in effect.” Previously, the reporting deadline for these companies was […]
The Corporate Transparency Act (“CTA”) and its reporting requirements are back in effect. The Fifth Circuit Court of Appeals has granted the U.S. Government’s motion for an emergency stay of the nationwide CTA injunction. This means the federal injunction that sought to overrule or pause the CTA is temporarily halted. As a result, reporting companies […]
