December was a confusing month for business owners wondering about the status of the Corporate Transparency Act, as its enforceability was repeatedly called into question.  For those unaware, the Corporate Transparency Act, or CTA, is an act that requires businesses (with some exceptions) to file Beneficial Ownership Information (BOI) Reports with the federal government.  Simply put, businesses need to report who their owners are, to prevent instances of fraud and money laundering.

The CTA was enacted in 2021 and the deadline for submitting these reports was set to be January 1st, 2025, until a series of legal rulings, injunctions, and reversals left the nation wondering if it would come into effect at all.  The issue was a debate about whether the federal government has the power to request this information from American companies under the Commerce Clause of the Constitution, which states that Congress has the power “to regulate commerce with foreign nations, among states, and with the Indian tribes.”  On December 3rd, a federal district court in the Eastern District of Texas ruled that the CTA was likely unconstitutional, and issued an injunction that prevented the Federal government from enforcing it.  However, on December 23rd, the Fifth Circuit Court of Appeals in New Orleans reversed that decision by issuing a stay on the injunction and ruling that the CTA likely was constitutional.  In the confusion, the Financial Crimes Enforcement Network (FinCEN) delayed deadlines for most businesses until January 13, 2025.

However, three days later, on December 26th, a different Fifth Circuit Court of Appeals got rid of the order staying the injunction.  This meant that the original injunction stood and the CTA could not be enforced.  At the time of writing, the CTA is currently still on hold, and there is no deadline for filing BOI reports.

What does this mean for business owners?  Although the CTA is on hold, it may be reinstated.  Currently, filing BOI reports is voluntary.  If you have not chosen to submit yours, it’s a good idea to have your files prepared, just in case.  The law has high penalties for late submissions, so make sure you aren’t caught off guard, and stay informed in case it goes back into effect!

Another thing to consider is to be wary of scams. If you are looking for help filing your BOI, CPAs in PA cannot file it for their clients. It is considered to be an illegal practice of law, because CPAs are not lawyers. I am not filing BOIs for any of my clients because they need lawyers to do it!  Some companies are showing up in advertisements, reaching out to say that they will file your BOI for a fee.  If a company reaches out saying that your filing is due, make sure to check.  Is it actually? The US Chamber of Commerce’s website says that you can stay on top of the updates here, so stay tuned!