What Small Business Owners Need to Know About the Corporate Transparency Act (CTA)
December 10, 2024
Due to recent legal challenges, the Corporate Transparency Act (CTA) is in flux. Here is what this means for small business owners like you.
On December 3, 2024, a U.S. District Court issued a preliminary injunction stopping enforcement of the CTA nationwide. Two days later, the U.S. Department of Justice appealed this decision, aiming to overturn the injunction and resolve questions about the CTA’s constitutionality.
For now, the Financial Crimes Enforcement Network (FinCEN), the government agency enforcing the CTA, has confirmed the following:
1. You are NOT required to file beneficial ownership information while the injunction is in place.
2. You WILL NOT face penalties for failing to report by the deadline on January 1, 2025.
What Should You Do in the Meantime?
Although the reporting requirement is currently on hold, it is smart to prepare for the possibility that it could be reinstated. Here is what you can do:
- Determine if your business is a “reporting entity.” The CTA applies to certain corporations, LLCs, and other entities, so it is worth checking if your business falls under this definition.
- Identify your beneficial owners. These are the individuals who ultimately own or control your company. Knowing this now will make compliance easier if reporting becomes mandatory again.
Optional: Voluntary Reporting
If you want to be proactive, you can voluntarily file your beneficial ownership information now. This would ensure your business is already in compliance, no matter what happens with the court decision.
Stay Informed
Idaho Estate Planning is closely monitoring this situation in an effort to keep our clients up to date. While there’s no immediate action required, staying ahead of these developments can save you time and stress down the road.
