Attorney Resource Center for the Corporate Transparency Act
Corporate Transparency Act (CTA)
Effective January 1, 2024
Attorney Resource Center
The Corporate Transparency Act (“CTA”) is effective January 1, 2024, and attorneys are understandably considering how to advise their clients on reporting requirements, penalties, and other details of the new law. This CTA Attorney Resource Center contains a variety of resources including webinars, links to resources provided by the Financial Crimes Enforcement Network or “FinCEN,” and some resources provided exclusively to InterActive Legal subscribers. The InterActive Legal Content Team will add resources from time to time to help you provide counsel to your clients who own or control entities that will be required to report under the CTA.
Resources provided by
InterActive Legal
DOJ Appeals to U.S. Supreme Court – Deadline for Response is Friday – Watch for Quick Decision
Published: January 8, 2025
Time to pay attention again! Although the nationwide injunction against enforcement of the Corporate Transparency Act is still in effect, the Department of Justice, on behalf of FinCEN, filed an Emergency Motion for Stay Pending Appeal with the United States Supreme Court on December 31, 2024. Justice Alito of the Supreme Court set a deadline of 4:00 PM Eastern on January 10, 2025 for the plaintiffs in the Texas Top Cop Shop case to file a response to the request by FinCEN to reinstate the emergency stay originally issued by the Fifth Circuit Court of Appeals. The Supreme Court’s decision on the emergency stay may be released shortly after the response is due. If the Supreme Court grants the government’s request, assume that FinCEN will continue its push to require compliance with the CTA and that Beneficial Owner Reports could be due as early as January 13, 2025 for most filers. For those keeping score, that’s Monday. Given FinCEN’s reaction last time, we might expect guidance from FinCEN granting a few additional days for most filers. However, even if granted, a new extension of time to file is unlikely to stretch until a decision on the preliminary injunction against enforcement of the CTA is made by the Fifth Circuit Court of Appeals. Oral arguments on that matter are scheduled for March 25, 2025. In any event, it’s time to pay attention to what the Supreme Court has to say in this matter if you have clients who may need to file a Beneficial Owner Report and who have been relying on the nationwide injunction to delay filing the report. It is possible that quick action may be needed. It is also possible that the Supreme Court will deny the government’s request and the injunction will remain in place at least until the Fifth Circuit makes a decision in March.
Webinar Sponsored by InterActive Legal, Peak Trust Company, and Shenkman Law
“Corporate Transparency Act: Filing Requirements – Practical Panel Discussion On What To Do Now?”
Friday, December 27, 2024, 2:30 – 3:30pm ET
Panelists: Jonathan G. Blattmachr Esq., Alan S. Gassman Esq.,
Walter Primoff CPA and Martin M. Shenkman Esq.
A live Q&A will follow the program.
This webinar will update practitioners on the latest developments and discuss various practical issues that many clients have faced with filings, even problems and frustrations the panelists themselves have had to navigate with the FinCEN website and recalcitrant BOIs.
*** New Development ***
CTA Injunction Back in Effect
Published: December 27, 2024
The Fifth Circuit Court of Appeals yesterday vacated its own order staying the preliminary injunction issued against the CTA by the United States District Court for the Eastern District of Texas in Texas Top Cop Shop. For those understandably having trouble keeping score, this means that the nationwide injunction against enforcement of the CTA is back in effect, so BOI reports are not required. For now. Based on how FinCEN responded the first time the preliminary injunction was lifted, if it is lifted again, we can expect only a brief window in which to file the required reports.
For more information on how best to prepare for another turnabout in this case, InterActive Legal will be sponsoring a webinar this afternoon at 2:30 where the panel will discuss the most recent developments in the CTA and give practical advice on how best to proceed and plan.
Attorney News Blog: FinCEN Issues Guidance on New Filing Deadlines in light of Fifth Circuit Court of Appeals Stay of Injunction
Published: December 26, 2024
Late Monday afternoon, December 23, 2024, FinCEN issued guidance giving reporting companies additional time to file Beneficial Ownership Information (“BOI”) reports following the Fifth Circuit Court of Appeals decision earlier Monday in Texas Top Cop Shop v. Garland. The court issued a stay pending appeal of the nationwide preliminary injunction issued by the United States District Court for the Eastern District of Texas on December 3, 2024, which would have prohibited enforcement of the Corporate Transparency Act. While it is unclear as of this writing whether the parties to the case will pursue further appeals or review and what the outcome of action might be, the guidance issued by FinCEN will come as a bit of relief to reporting companies who have not yet filed their BOI reports …
FinCEN Alert
Published: December 23, 2024
Alert: Updates to Beneficial Ownership Information Reporting Deadlines – Beneficial Ownership Information Reporting Requirements Now in Effect, with Deadline Extensions
FinCEN is an external website
Attorney News Blog: CTA Injunction Stayed by Fifth Circuit Court of Appeals
Published: December 23, 2024
We have received word that on December 23, 2024, the Fifth Circuit Court of Appeals granted the government’s emergency motion for a stay pending appeal of the preliminary injunction granted by the United States District Court for the Eastern District of Texas. In issuing the stay, the Court apparently ordered that the appeal be heard on an expedited basis at the next available oral argument panel. That would appear to effectively push the argument past the existing January 1 filing deadline. As such, the nationwide preliminary injunction staying enforcement of the CTA should not be relied upon and beneficial ownership reports should be filed in conformity with existing deadlines applicable to the reporting company unless the reporting company has specific judicial relief lifting those requirements for particular plaintiff reporting companies. However, the parties in the case could appeal to the full panel of the Fifth Circuit or to the U.S. Supreme Court over the next few days and more changes could be forthcoming. We will update with more information when we have it.
Attorney News Blog: Texas Top Cop Shop CTA Case Update
Published: December 16, 2024
Matters in Texas Top Cop Shop have accelerated.
The Department of Justice had filed an emergency motion with the U.S. Court of Appeals for the Fifth Circuit on December 13, 2024, to stay pending appeal the preliminary injunction issued by the U.S. District Court for the Eastern District of Texas, which prevented enforcement of the Corporate Transparency Act. The government has asked for a ruling by December 27, 2024. The Fifth Circuit, of its own accord, accelerated the briefing schedule and the final responses are due to the Court by December 19th. As such, many observers believe it is probable that the Fifth Circuit will issue a ruling before the end of the year. (There is also an on-going appeal of the preliminary injunction at the District Court.)
The Fifth Circuit could deny the government’s request for a stay of the preliminary injunction, effectively upholding its nationwide impact on the CTA, or it could grant full or partial relief to the government. If the Fifth Circuit grants a full stay of the preliminary injunction, then the January 1, 2025 filing deadline for reporting companies in existence as of January 1, 2024 will be back in effect nationwide (unless FinCEN extends that deadline). If the Fifth Circuit grants a partial stay of the preliminary injunction, then the reporting deadline will be back in effect for reporting companies outside the jurisdiction of the Eastern District of Texas (or possibly for all reporting companies except the named plaintiffs).
Given the upcoming holiday season and the very limited time to file any required beneficial ownership information reports timely, it is important that all attorneys advising clients who may have a reporting obligation under the CTA either to file voluntarily before January 1 or be ready to file before January 1 and pay very close attention to the decisions in this case. The Fifth Circuit’s decision, which may be issued next week, may offer some temporary guidance. However, the District Court may also issue an opinion in this matter on the appeal of its own preliminary injunction which could also change the landscape as it exists now.
Attorney News Blog: Corporate Transparency Act Reporting Enjoined and Stay Issued
Published: December 4, 2024
UPDATED: December 9, 2024
12/9/2024 Update: In a statement issued by FinCEN over the weekend, FinCEN announced that it will comply with the order issued by the District Court in Texas Top Cop Shop “so long as it is in effect. Therefore, reporting companies are not currently required to file their beneficial ownership information with FinCEN and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect.” (emphasis added) FinCEN also disclosed that the Department of Justice filed a Notice of Appeal on December 5, 2024, and reminded the public that voluntary compliance with the CTA reporting requirements could continue.
Obviously, we do not know what will happen, although we think it unlikely that the January 1, 2025 initial required filing date will stand. Similarly, the filing deadlines applicable to newly formed reporting companies are also on hold while the injunction is applicable. However, if your client formed a new company and the reporting deadline was imminent when the stay was issued, it is probably prudent to ensure that you have all the information necessary to file immediately if the injunction is lifted with no change in requirements in case additional time to file is not granted. FinCEN’s seeming emphasis on the fact that enforcement of the CTA is stayed “so long as the order is in effect” may indicate that the government is not intending to grant additional time to file. Thus, for instance, it is possible that if a decision to lift or vacate the injunction is made or after on January 2, 2025, all reporting companies with a January 1 reporting deadline would need to file immediately. Although it does seem unlikely that no additional time to file would be granted upon the possible lifting of the stay, it may well be that such additional time may not be lengthy, given that existing reporting companies have had almost an entire year to report prior to the preliminary injunction being granted. As such, until and unless FinCEN indicates that an extension of time to file will be granted, it is likely prudent that all information necessary for reporting is gathered and ready to file if your clients do not wish to file voluntarily. The decision about whether to file voluntarily is a difficult one. On the one hand, it ensures that if the injunction is vacated and there is a need to file quickly, your clients will already be in compliance. On the other hand, many clients may not want their information submitted to the government if there is no requirement to do so (and some may not want to pay for the services in connection with filing). Hence, it would seem appropriate to obtain permission to file (and charge) if you decide to go ahead and file for your clients.
Webinar Sponsored by InterActive Legal, Peak Trust Company, and Shenkman Law
“Corporate Transparency Act: Trusts and Related Considerations”
FinCen Beneficial Ownership Information News
On July 24, 2024, FinCEN updated its Beneficial Ownership Information Frequently Asked Questions page to include a new question (F.13) concerning the appropriate tax identification number to report to FinCEN on its beneficial ownership information report if a reporting company is a disregarded entity. It should be noted that if a disregarded entity does not have its own EIN, it will not need to obtain one to meet its reporting obligations to FinCEN so long as it can report another type of taxpayer identification number as provided. The link to FinCEN’s Frequently Asked Questions is here.
Attorney News Blog:
FinCEN Updates its Beneficial Ownership Information FAQ Page
On April 18, 2024, FinCEN updated its Beneficial Ownership Information Frequently Asked Questions page to include new questions concerning beneficial ownership through trusts, application of the rules to corporate trustees, and other topics.
New Questions D.14-D.16 focus on beneficial ownership of reporting companies through trusts…
New – FinCEN Response to National Small Business United Case
On March 4, 2024, FInCEN announced its response to the declaration by the Northern Alabama District Court that the Corporate Transparency Act is unconstitutional and declared that it would be suspending enforcement of beneficial ownership reporting deadlines against the plaintiffs in the case. There was no mention of delaying the deadline as to any other person who may be required to report under the Act. Read the announcement here.
As widely expected, the Justice Department filed an appeal of the case on March 11, 2024. Read the very brief appeal here.
New Development Regarding the Corporate Transparency Act
(3/1/2024)
In National Small Business United v. Yellen, No. 5:22-cv-01448-LCB (N.D. Ala. Mar 1, 2024), the Northern District Court of Alabama ruled that the Act is unconstitutional on the grounds that it exceeded Congress’ legislative powers. The Court also specifically enjoined the government from enforcing the Corporate Transparency Act against the Plaintiffs in the case, though there is no mention of whether the government can otherwise enforce the Act against others. With the initial 90-day filing deadline for newly formed reporting companies approaching at the end of March, it seems probable that the government will appeal the ruling and either request a stay of the injunction or voluntarily announce a further delay in the reporting deadlines to prevent inconsistent enforcement issues. A link to the memorandum opinion is available below.
Attorney News Blog:
Getting Ready for the Corporate Transparency Act: Prepare Now
Will you and your firm be ready to deal with the challenges posed by the CTA and reap the rewards of increased confidence and trust of your clients? If you are like many attorneys, you are aware of the CTA and its requirements but do not yet feel fully prepared to grapple with it in practice. The exact approach you take in dealing with the CTA may vary depending on the size of your firm, your client base, and your capacity to take on additional work. This task list is suggested as a starting point to help you become better prepared.
New Development:
HR 5119 passed December 12, 2023; Awaiting Senate action
The U.S. House of Representatives passed HR 5119, the Protect Small Business and Prevent Illicit Financial Activity Act, by an overwhelming vote of 420-1 on December 12, 2023. If taken up in the Senate and passed as is, the bill would make certain important changes to the current reporting deadlines:
- For businesses existing before January 1, 2024, the deadline for making an initial report would be extended to January 1, 2026;
- For businesses created on or after January 1, 2024, the deadline for making an initial report would be extended to 90 days from formation. This 90-day deadline would also apply to businesses created on or after January 1, 2025. (An announcement from FinCEN on November 29, 2023 extended the deadline for companies created in 2024 to 90 days but had left the original 30-day deadline in place for companies created after 2024.)
- The deadline for updated reports and changes would be extended to 90 days from the date of the change, instead of 30 days.
In addition, the bill contains a provision that, while somewhat unclear, may be aimed at preventing FinCEN from acting to allow reports “relating to the inability of the reporting company to obtain or identify information in the alternative to filing a report required under this subsection.” This proposed new section 31 USC 5336(b)(1)(H) may prevent FinCEN from providing any relief to reporting companies who in good faith attempt to obtain the required information from beneficial owners. Additional clarity as to the government’s intent would be welcome; however, for attorneys advising clients about the Corporate Transparency Act, careful consideration may be required to determine how the company will force compliance with its reporting requirements amongst its members, partners and associates if there will be no relief available to a reporting company that attempts but is unsuccessful at gathering information regarding beneficial owners. You can read the bill here.
Webinar Sponsored by InterActive Legal, Peak Trust Company, and Shenkman Law
“Corporate Transparency Act: Deeper Dive”
by Jonathan G. Blattmachr Esq., Abigail E. O’Connor Esq., Chris Lauer Esq. and Martin M. Shenkman Esq.
Originally Aired on 12/18/2023
This program will delve deeper into dealing with the CTA and not just summarize the new rules. The focus will be on discussions of the panelists to present different points of view and different ideas.
Webinar Sponsored by InterActive Legal and Shenkman Law
“Are you prepared for the Corporate Transparency Act?”
by Jonathan G. Blattmachr Esq. Abigail E. O’Connor Esq. and Martin M. Shenkman Esq.
Originally Aired on 11/20/2023
This webinar reviews the highlights, requirements, and framework to understand and address the Corporate Transparency Act (“CTA”), but it will go much deeper than just summarizing the new rules. This program will provide practical step-by-step strategies for communicating with clients about the CTA.
Forbes Article
”Act Before Year End: Corporate Transparency Act Is Coming!”
Published 11/14/2023
InterActive Legal Advisor and webinar presenter, Martin Shenkman, has written this article for Forbes, highlighting the urgency and importance of estate planners understanding this soon-to-be-effective federal law.
InterActive Legal Subscriber Sample 2023 Year End Planning Letter
by InterActive Legal Attorneys
Published 11/27/2023
This is a sample letter that can be adapted and sent to clients that discusses both the Corporate Transparency Act and the imminent sunset of the increased estate and gift tax exemption and what steps clients need to take.
Update November 29, 2023: Today FinCEN announced an amendment to the final rules for beneficial ownership reporting with respect to reporting companies created from January 1, 2024 through December 31, 2024. For reporting companies created during this timeframe, the reporting deadline for initial reports is extended from 30 days to 90 days from the formation of the company. However, for reporting companies formed on or after January 1, 2025, the deadline for filing initial reports goes back to 30 days from formation of the reporting company. Note that FinCEN did not change the 30 day deadline for reporting changes, which would be effective for reporting companies formed in 2024 and thereafter. InterActive Legal has updated the Sample Client letter to reflect this amendment to the final rules. You can read the announcement from FinCEN here.
The Sample 2023 Year End Planning Letter is for
InterActive Legal subscribers ONLY
Resources from InterActive Legal and LawEasy
by Jonathan G. Blattmachr Esq. and Martin M. Shenkman Esq.
Introduction to the
Corporate Transparency Act
Recorded on 11/22/2023
Corporate Transparency Act:
Steps to Take in 2023
Recorded on 12/4/2023
Resources provided by the
Financial Crimes Enforcement Network (FinCEN)
These links direct you to external sites
Corporate Transparency Act, 31 U.S.C. 5336 (Beneficial ownership reporting requirements)
Beneficial Ownership Information Reporting Rule Fact Sheet
Beneficial Ownership Information Reporting Final Rule
Use of FinCEN Identifiers for Reporting Beneficial Ownership Information of Entities Final Rule
FinCEN Small Entity Compliance Guide
FinCEN Beneficial Ownership Information Reporting Frequently Asked Questions (Updated 7/24/2024)
Proposed Anti-Money Laundering Regulations for Residential Real Estate Transfers
Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)