Breaking Update:
A U.S. District Court has found the Corporate Transparency Act's (CTA) reporting requirements likely unconstitutional, issuing a nationwide preliminary injunction that temporarily suspends the January 1, 2025, compliance deadline.
The preliminary injunction suspends the reporting requirements of the CTA and its Beneficial Ownership Information (BOI). As a result, companies are not required to meet the reporting deadline until the court issues further orders.
Background Information:
Under the CTA, businesses were mandated to report Beneficial Ownership Information (BOI),which identifies company owners, controllers, and beneficiaries. Enacted by Congress in 2021, the CTA was intended to create a national database of the beneficial owners of companies in the U.S. as part of an increasing effort to combat money-laundering, terrorism, fraud, tax evasion and other financial crimes. The database would be owned by the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
How to Proceed:
The government is expected to appeal the current decision. Future legal actions could reverse the ruling, with the court potentially reinstating the reporting requirements. While the preliminary injunction is likely to remain in affect during an appeal process, is it best practice to remain cautious and prepared. ADKF will closely monitor any updates on the situation and provide timely information as it becomes available.
You may find additional information with the Journal of Accountancy and the National Federation of Independent Business.