Written by James A. Carolan, CWS®, CTFA | Sr. Estate Planning Attorney for EWM Legal Solutions
Big news for business owners! On December 3, 2024, a federal judge in Texas issued a nationwide ruling that temporarily halts enforcement of the Corporate Transparency Act (CTA) and its related reporting requirements. This decision comes from Judge Mazzant in the case *Texas Cop Shop, Inc. et al. v. Merrick Garland, Attorney General of the United States et al.* (Case No. 4:24-CV-478).
Here’s what this means:
What Happened?
The judge’s decision stops the government from requiring businesses to meet the CTA’s reporting deadlines for now. Previously, only certain businesses were exempt from these rules, but this ruling applies to all businesses across the country.
What Is the CTA?
The CTA requires businesses to file a Beneficial Ownership Information (BOI) report with the Financial Crimes Enforcement Network (FinCEN). These reports include:
- The company’s legal name and any trade names
- Address of the main office or principal place of business
- The company’s Employer Identification Number (EIN)
- Names, birth dates, and addresses of beneficial owners
- A copy of an official ID (like a driver’s license) for each owner, including a photo of the ID
- Updates to any of this information whenever it changes
FinCEN would keep this information for at least five years after a company closes, sharing it only with authorized law enforcement agencies.
What’s Changed?
For now, businesses are not required to file BOI reports by the January 1, 2025, deadline. Judge Mazzant’s ruling says the CTA is “likely unconstitutional,” and enforcement is on hold until further notice. This means the January 1 deadline is no longer enforceable.
What’s Next?
This is not the final decision. The case will likely move to the Fifth Circuit Court of Appeals, and it could even reach the U.S. Supreme Court. Additionally, Congress or FinCEN might take new actions before or after the new presidential administration begins in January 2025.
On December 4, 2024, FinCEN issued the following statement:
The Corporate Transparency Act (CTA) plays a vital role in protecting the U.S. financial system, as well as people across the country, from illicit finance threats like terrorist financing, drug trafficking, and money laundering. We continue to believe—consistent with the conclusions of other federal courts—that the CTA is constitutional. Yesterday’s ruling is one of several cases pending before courts around the country, including ones in which district courts have denied requests to enjoin the CTA and that are now before courts of appeals. We are reviewing the ruling to determine our next steps. We would refer you to DOJ for any further information about the case.*
What Should You Do?
For now, you don’t need to file a BOI report. However, this situation could change quickly, so stay tuned for updates. We’ll keep monitoring the case and provide more information as it becomes available.
If you have any questions or concerns about how this affects your business, feel free to reach out.
Where to Start?
Contact me at EWM Legal Solutions. I’m here to assist you in these kinds of legal matters, helping you protect what you care about most.
James A. Carolan, CWS®, CTFA
Sr. Estate Planning Attorney
Executive Wealth Management and EWM Legal Solutions are separate but affiliated companies. Executive Wealth Management (EWM) is a Registered Investment Advisor with the Securities and Exchange Commission. Reference to registration does not imply any specific level of qualification or skill. Investment Advisor Representatives of EWM offer Investment Advice and Financial Planning Services to customers located within the United States.
