The Corporate Transparency Act (CTA) was effective on January 1, 2024, but it has yet to take off.
Willful violations of the CTA are published by a civil fine of $591/day, upto $10,000 in criminal penalties and two years in prison.
The new filing requirement is not going well. As of early December 2024, only around 9 million of the estimated 32.6 million businesses subject to the CTA had filed their BOI reports.
The Texas Federal District Court ruled on December 3, 2024, that if you do not file your FinCEN BOI report during the court’s injunction, you could not be penalized by FinCEN. On December 23, 2024, the Fifth Circuit Court of Appeals ruled to overturn the Texas injunction and immediately reinstate the FinCEN BOI filing requirements.
FinCEN later extended the January 1, 2025, filing date to January 13, 2025, and extended all other deadlines for a short time.
On December 26, 2024, the Fifth Circuit vacated its stay on the Texas court’s injunction.
The reporting companies are not currently required to file the beneficial ownership information with FinCEN, and they are not subject to penalties for not filing while the injunction remains in force.
While the injunction is in effect, the BOI filing is not required, according to the FinCEN’s alert, but you can file voluntarily.
The Texas case is only one of the 13 nationwide lawsuits filed against the CTA in federal district courts. The courts that issued the rulings are split on where the law is constitutional.
One district court in Alabama already held that the CTA is unconstitutional. Still, it declined to issue a nationwide injunction preventing FinCEN from enforcing it against all reporting entities and individuals other than the plaintiffs in the case.
FinCEN has appealed to the Fifth Circuit of Appeals, and a decision is expected soon. In September, oral arguments were held, and observers thought the court was inclined to rule in FinCEN’s favor.
Unlike Texas and Alabama cases, federal district courts in Oregon, Michigan and Virginia have declined to issue preliminary injunctions to halt enforcement of the CTA, ruling that, in their opinion, the law is likely constitutional. The cases have gone for appeal.
Even before the Texas district court issued its order enjoining the CTA, there were calls to extend the deadline by a year since most of the 32.6 million reporting companies had not filed BOI reports. The delay is expected to increase further due to the Texas district court’s injunction.
Bills have been introduced in Congress to repeal the CTA. It is unclear whether the Trump administration will support or repeal it.
If you have already filed the BOI report, there is nothing much to do.
If your report needs updating due to a change, wait until the injunction is lifted or another resolution is reached.
You can still file despite the injunction in force if you haven’t filed your BOI report. But there is no need to do so.
If you have not filed the BOI report, you can wait for the injunction to be lifted.
But note that once the injunction is lifted, you will not have much time to report. When the Fifth Circuit ruled on December 23, the companies had only a week’s time to report.
If a new deadline is set, the available time could be as short as 13 days. So start collecting information for your BOI report filing.
Look out for the court developments on the filing deadline. It is best to file now to make things simple and avoid tension.
BergerCPAFirst, with over 30+ years of experience, offers comprehensive tax preparation services for individuals and businesses nationwide. Our commitment is to provide personalized attention while ensuring compliance and maximizing tax benefits. If you have any questions or would like to schedule a consultation, please call (201) 587-9200 or send us an inquiry.