Wait before you file the Beneficial Ownership Information Report!
The Corporate Transparency Act (CTA) requires most businesses, LLCs, Corporations, and limited liability entities to report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) to supposedly combat financial crimes effectively. Initially proposed under the Biden Administration, this legislation aimed to compel all businesses to disclose ownership and detailed information to the federal government. However, the implementation of the CTA is currently facing confusion and legal challenges.
Recently, the Treasury Department announced that it would not impose penalties for non-compliance and has extended reporting deadlines, now limiting these requirements primarily to foreign entities. This decision has led to increased lawsuits from state attorneys general, highlighting that the issue involves state rather than federal jurisdiction.
This situation creates significant uncertainty for business owners and lawyers as they navigate unclear compliance obligations. Legal challenges against the CTA are ongoing in several federal courts, with the 5th Circuit actively reviewing potential changes to enforcement policies. Meanwhile, the 11th Circuit is delayed in deciding on a constitutional challenge raised by small business owners.
Additionally, 12 state attorneys general have argued that the CTA infringes upon states’ rights to regulate corporations as they see fit. On the regulatory front, revised reporting deadlines are forthcoming, and there is a growing bipartisan movement in Congress demanding accountability from the Treasury regarding its decision to suspend reporting requirements for U.S. entities. Senators Whitehouse and Grassley have formally requested explanations from the Treasury about these controversial changes, emphasizing the need to adhere to the law as outlined in the CTA. Furthermore, the Trump Administration supports repealing the reporting requirement for U.S. businesses.
If you have questions about this, call us at (856) 665-2121
RJC March 20, 2025
