You may have read that on December 3, 2024, the United States District Court of Texas granted a nationwide injunction against enforcement of the Corporate Transparency Act (CTA).
The CTA, which went into effect on January 1, 2024, required companies to disclose information about their beneficial owners to the U.S. Departments of Treasury’s Financial Crimes Enforcement Network (FinCen). The deadline to report was originally set for December 31, 2024.
While the reporting requirement is stayed, we don’t know if the decision will be appealed. Our office will continue to monitor further developments and provide updates.
Currently, you do not need to take any action because of the injunction. However, if the injunction is lifted, the law (as it stands) requires that you comply as summarized below.
Do I Need to Report?
All entities formed or registered to do business in the U.S., including single member LLCs and single shareholder corporations.
Are There Exceptions?
Yes, there are limited exceptions. Examples include: public companies, insurance companies, banks, registered investment companies, registered investment advisers, and businesses regulated by either a state or federal agency.
What Do I Need to Report?
You must disclose certain information about the company e.g., name, address, taxpayer identification number, and identify all “beneficial owners” and “applicants”.
You are considered a “beneficial owner” if you directly or indirectly exercise substantial control over the entity, or you own/control more than 25% of the ownership interests.
What if I Don’t Report?
- Penalties: The Act provides both civil penalties (up to $500/day for non-compliance which is adjusted annually for inflation) and criminal penalties (up to $10,000 and 2 years imprisonment) for willfully providing false information, failing to provide complete information, or failing to update information.
- Who Gets Penalized: Both individuals and corporate entitles can be held liable for willful violations. This can include the individual who actually files the false information and the person providing the filer with false information.
How Do I Report?
Visit https://boiefiling.fincen.gov/ to complete your report.
This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
Mona Naser | Practice Areas: Commercial & Residential Real Estate, Business Transactions, Litigation, and Workouts
Mona is a highly experienced legal professional specializing in providing counsel and representation to both corporate clients and individuals across various practice areas. Her knowledge base spans commercial litigation, real estate (both commercial and residential), and general corporate law, positioning her as a trusted advisor and advocate for her clients. If you need assistance with a related matter, contact Mona.
