Corporate Transparency Act on Hold: What Small Businesses Need to Know
A federal judge in the Eastern District of Texas issued a nationwide injunction blocking the enforcement of the Corporate Transparency Act (CTA), less than a month before its January 1, 2025, filing deadline. The CTA requires businesses with fewer than 20 employees or $5 million in revenue to report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). The ruling has thrown compliance timelines into question.
On December 5, the Department of Justice (DOJ) filed an appeal with the 5th Circuit Court of Appeals, seeking to lift the injunction. The timing of the appeal hearing remains unclear, leaving businesses in limbo regarding their obligations under the CTA.
What’s Next
In response to the uncertainty, lawmakers on Capitol Hill are exploring a potential one-year delay for the filing deadline. Reports suggest that this extension may be added to the year-end Defense funding bill, which could offer businesses more time to prepare.
Why It Matters
- For Small Businesses: The CTA’s requirements are a significant compliance burden, particularly for smaller businesses unfamiliar with FinCEN reporting. The injunction offers temporary relief but introduces uncertainty about long-term obligations.
- For Lawmakers: The delay proposal reflects broader concerns about the readiness of businesses and the practicality of implementing the CTA on the current timeline.
As the appeal process and legislative negotiations unfold, the fate of the CTA remains uncertain. Businesses should use this time to prepare while monitoring developments closely.
