Corporate Transparency Act (CTA) on hold

A recent Texas court decision has put the Corporate Transparency Act (CTA) on hold, leaving businesses wondering what to do next.

What’s Happening

The CTA requires certain businesses to report their owners and control persons to FinCEN to fight money laundering and tax evasion. While the original filing deadline was January 1, 2025, lawsuits challenging the law’s constitutionality have led to a nationwide injunction temporarily halting enforcement.

Despite this, the law is still technically in effect, and FinCEN’s system is open for voluntary filings. The future of the law depends on ongoing court cases, including an appeal in the Fifth Circuit, which could reinstate the filing requirements at any time.

What Should Businesses Do?

Experts suggest three options for businesses:

• Finish Filing: If you’ve already done most of the work, it might make sense to submit your report and avoid future hassles.
• Wait and See: Businesses that haven’t started or are unsure may choose to pause until there’s more clarity.
• Prepare and Pause: Gather your information now but hold off on filing until the situation is resolved.

Smaller, simpler entities might find it easy to file, while those with complex structures may want to wait, given the costs and effort involved. Businesses managing multiple entities should weigh the risks of penalties for non-compliance if the injunction is lifted suddenly.

Why It Matters

The CTA aims to give law enforcement tools to track illicit financial activities. The court’s decision delays these efforts and could complicate enforcement down the line. If the appeals process drags on or ends in conflicting rulings, the issue could end up before the Supreme Court, further delaying clarity.

For now, businesses must balance the uncertainty of the law’s status with the potential risks and costs of non-compliance.