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Procrastinators everywhere are rejoicing over the December 3rd federal court ruling that’s hit the pause button on the Corporate Transparency Act’s (CTA) enforcement date.
Recently, small business owners pushed back against the CTA’s reporting requirements, arguing they were overly burdensome and even unconstitutional. The court agreed that the powers Congress invoked—like regulating commerce, handling foreign affairs, and collecting taxes—don’t clearly cover FinCEN’s ability to enforce these specific rules. As a result, the court issued a temporary order preventing the government from moving forward with the CTA’s reporting mandates.
Keep in mind this is only a temporary speed bump, not a permanent fix. We’re all waiting to see how the legal back-and-forth plays out. In other words, stay tuned: the final word is still up in the air.
For those who’ve been holding off, a “wait and see” approach makes sense right now. But don’t get too comfortable—the penalties for non-compliance are significant, so pay attention to future developments. If the CTA ultimately stands, the clock could start ticking quickly once enforcement resumes.
If you’re among those who decided to file early, your best move might be to keep everything current. You’ve already done the heavy lifting, so maintaining your documentation beats trying to start all over again if (or when) the CTA’s requirements kick back in.
Passed in 2021, the Corporate Transparency Act aims to crack down on financial crimes—think money laundering, terrorist financing, and drug trafficking—by requiring certain businesses to report Beneficial Ownership Information (BOI) directly to FinCEN. The penalties for willful non-compliance are no joke: ongoing daily fines, plus the potential for prison time and hefty monetary penalties.
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