Two Court Rulings Later, Stay On Corporate Transparency Act Implementation Still In Effect
The holiday season brought significant back and forth on an issue the Metals Service Center Institute (MSCI) has been closely watching: implementation in the United States of the Corporate Transparency Act (CTA).
As a reminder, the CTA requires every U.S. business entity with fewer than 20 employees or $5 million in revenues to file a report with the federal Financial Crimes Enforcement Network (FinCEN) identifying and providing information about the owners of the business. While the law is intended to crack down on money laundering, it is was written so broadly that its requirements will ensnare more than 32 million small businesses.
What happened? On Dec. 23, a U.S. appellate court ruled in favor of the federal government, reversing a nationwide injunction against CTA implementation that had been in effect. The ruling would have meant affected companies would have had mere days to file beneficial ownership paperwork with FinCEN. Fortunately, on Dec. 26, another federal court upheld the prior stay on enforcement of the CTA. That second ruling meant U.S. businesses did not need to file beneficial ownership forms with FinCEN by Jan. 1, 2025.
While it is expected the federal government will petition the Supreme Court to override the Dec. 26 ruling, as of this moment, small businesses are protected from the CTA’s burdensome requirements.
In related news, the U.S. Fifth Circuit of Appeals recently announced that it would hear oral arguments on the constitutionality of the CTA on March 25, 2025. In addition, interested parties are awaiting a ruling by the U.S. Eleventh Circuit Court, which has heard an appeal to a case in the Northern District of Alabama that found the CTA unconstitutional.
As noted above, MSCI and dozens of other trade associations, including the S Corp Association, have been working to delay the CTA requirements or reverse them completely. With several more cases to be decided, and a potential appeal to the Supreme Court of the United States after that, this fight will continue well into 2025. Stay tuned to Connecting the Dots as the story develops.
Read more about the CTA’s requirements at this link.