Corporate Transparency Act Latest Update for Business Owner Reporting

The Corporate Transparency Act (CTA) is a federal law designed to combat financial crimes like money laundering and tax evasion by requiring certain businesses to disclose their beneficial ownership information (BOI). While the CTA officially took effect in January 2024, a recent federal court injunction has temporarily paused enforcement of its reporting requirements. This article explains the current state of the CTA, what the injunction means for business owners, and how the business planning team Legacy Design Strategies can help you prepare for future developments.

What Is the Corporate Transparency Act?

The CTA aims to enhance transparency in the U.S. business environment by identifying individuals who own or control significant stakes in certain companies. These disclosures help prevent the misuse of shell companies for illicit activities.

Under the CTA, businesses must file a BOI report with the Financial Crimes Enforcement Network (FinCEN). This report includes information about individuals who own or control at least 25% of a company or hold a significant decision-making role.

Current Legal Enforcement of BOI Reporting Requirements 

On December 26, 2024, a panel of the U.S. Court of Appeals for the Fifth Circuit reinstated a nationwide injunction that blocks the enforcement of the CTA and its implementing regulations. This ruling followed a series of court decisions and appeals, including a temporary lifting of the injunction on December 23, 2024, which was promptly vacated three days later.

Key Points of the Injunction:

• No mandatory reporting: Businesses are not currently required to file BOI reports with FinCEN.
• No liability for non-compliance: While the injunction remains in effect, companies will not face penalties for failing to submit BOI reports.
• Voluntary filings permitted: Businesses that wish to file BOI reports proactively may do so through the FinCEN BOI E-Filing System.

The Department of Justice, on behalf of the Department of Treasury, is actively appealing the injunction, which could lead to a reversal in the future.

Which Organizations Are Subject to the CTA?

The CTA applies to a wide range of businesses, particularly small and closely held companies. However, certain entities are exempt, including:

• Large companies with over 20 full-time employees and more than $5 million in annual revenue.
• Regulated entities such as banks, credit unions, and publicly traded companies.
• Nonprofits and certain types of trusts.

Also Read: How Does a Trust Fund Work?

Small Omaha businesses like LLCs, corporations, and partnerships are likely required to comply if the injunction is lifted.

What Information Is Required for BOI Reporting?

If and when the CTA’s reporting requirements are reinstated, businesses will need to provide detailed information about the company and its beneficial owners, including:

• For the business:
  • Full legal name and trade names.
  • Principal place of business in the U.S.
  • Tax identification number.
• For each beneficial owner:
  • Full legal name, date of birth, and residential street address.
  • Identification number from a government-issued ID (e.g., driver’s license or passport).

Newly formed businesses may also need to report information about “company applicants”—individuals who played a role in registering the company.

What Are the Penalties for Non-Compliance?

Although reporting is not currently required due to the injunction, it’s important to understand the potential consequences of failing to comply if the CTA’s enforcement is reinstated. Penalties may include:

• Fines of up to $10,000.
• Imprisonment for up to two years.
• Additional fines for failing to update inaccurate information within 30 days of a change.

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How Omaha Business Owners Can Prepare While the Injunction Is in Effect

Even though BOI reporting is paused, it’s wise to stay prepared. Here are a few steps to ensure you’re ready if reporting requirements resume:

1. Determine Applicability

Review whether your business falls under the CTA’s requirements. Small businesses, especially LLCs and closely held corporations, are likely subject to the law.

2. Gather Necessary Information

Collect and organize the required information for all beneficial owners and company applicants. This ensures you can act quickly if reporting deadlines are reinstated.

3. Monitor Legal Updates

Stay informed about court rulings and FinCEN announcements. The situation surrounding the injunction is fluid, and deadlines could be reinstated with little notice.

4. Seek Professional Guidance

Consult with an Omaha business planning attorney to clarify your obligations and develop a compliance strategy.

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Getting Help with Your BOI Report from an Omaha Business Planning Attorney

Legacy Design Strategies is here to help business owners navigate this evolving legal landscape. Whether you choose to file voluntarily or wait for further guidance, we can assist you in ensuring your business is ready to comply if and when the CTA is fully enforced.

Request a consultation with our business planning team to take proactive steps to protect your business.