Blog provided by Jordan Cardenas and our partners at The Compliance Center

It’s back . . . the Corporate Transparency Act (“CTA”). The CTA is now enforceable again after a federal court in Texas lifted its nationwide preliminary injunction that prevented the federal government from enforcing the CTA. The Financial Crimes Enforcement Network (“FinCEN”)—the federal government agency in charge of enforcing the CTA—announced that the new deadline for a company to file its beneficial ownership information (“BOI”) report is March 21, 2025, for companies that existed before January 1, 2024, or companies that had a reporting deadline on or before March 21, 2025. However, companies that had a reporting deadline later than March 21, 2025, must still file their BOI report by their original deadline date; this reporting deadline rule generally only applies to companies that were created on or after January 1, 2024. Therefore, the vast majority of companies will have a reporting deadline of March 21, 2025. FinCEN, however, hinted that it may extend the deadline further past March 21, 2025, but we are waiting to receive additional guidance from FinCEN to see if it extends the reporting deadline.

So, what does the CTA require companies to do again? The general rule is that all corporations, LLCs, and other entities created by filing a document with a secretary of state’s office (or other similar office), must file a BOI report to FinCEN. These business entities are required to file a BOI report unless certain exemptions apply; there are 23 possible exemptions. It is estimated that over 30 million businesses will be required to file a BOI report. For companies that existed before January 1, 2024, the BOI report must disclose information about the company itself and must disclose all the owners of the company. For example, the BOI report requires that a company submit a photocopy of the driver’s license or passport for every owner of the company.

There are serious consequences for companies that fail to comply with the CTA. Any person or company who provides false information or fails to comply with the CTA may receive a $500 civil penalty for each day the violation continues and criminal penalties such as imprisonment for up to two years and a fine up to $10,000.

Now what? Given the uncertainty of the CTA’s enforceability, WFJ recommends that companies plan to comply with their reporting requirements. Unless an exemption applies, companies that existed before January 1, 2024, should take the necessary steps to be ready to file their BOI report by March 21, 2025, due to the serious criminal and civil penalties for non-compliance. In the meantime, WFJ will carefully monitor the litigation surrounding the CTA and FinCEN’s plan to keep or extend the new reporting deadline.