One-Year CTA Delay Included in Year-End Funding Package

A one-year delay to the Corporate Transparency Act (CTA) reporting requirement for companies in existence prior to January 1, 2024 has been included in the end-of-year funding package before Congress this week. If enacted, the delay would apply to companies in existence prior to January 1, 2024, but would not impact eligible business entities created after said date.

The goal of the CTA is to prevent money laundering and tax fraud by requiring certain businesses to disclose ownership information in the form of beneficial ownership reports. The law applies to privately held and many non-profit entities, including corporations, limited liability companies, limited partnerships, business trusts and other similar entities that are created by the filing of a document with a secretary of state or similar governmental office.

Earlier this month the District Court for the Eastern District of Texas granted a national injunction enjoining the government from enforcing the CTA and expressly stating that companies “need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.” The U.S. Department of Justice then filed an appeal to the injunction but there is no clear timeline for when that appeal will be decided. If the appeals court were to strike down the injunction between now and the end of the year, this could reinstate filing requirements for companies formed in 2024 even if the legislative delay does become law.

If you believe you may be impacted by this law’s requirements, we recommend you consult with legal counsel to evaluate your own obligations.

For more information contact Moutray McLaren at mmclaren@icsc.com.