The Corporate Transparency Act (CTA) was enacted in 2021 to enhance financial transparency and to combat money laundering and other financial crimes by requiring most business entities to file a Beneficial Ownership Information (BOI) report with the federal Financial Crimes Enforcement Network (FinCEN). The law officially took effect on January 1, 2024. Business entities which are subject to the CTA’s requirements were supposed to have filed their BOI reports with FinCEN by December 31, 2024 at the latest.
Some business owners objected to the CTA because, among other reasons, the BOI reports require the disclosure of their personal information, including copies of their driver’s licenses or passports, to the federal government. As a result, the implementation of the CTA has faced several court challenges which have led to uncertainty regarding its current legal status. While the U.S. Supreme Court lifted a nationwide injunction against enforcement of the CTA in one Texas case (Garland v. Texas Top Cop Shop ) on January 23, 2025, there was a separate Texas case (Smith v. U.S. Department of the Treasury) in which the judge had ordered, in the interim, that the effective date of the CTA’s reporting requirements should be postponed nationwide while the case is still pending. As of January 25, 2025, FinCEN’s website states that despite the U.S. Supreme Court’s ruling, business entities are not currently required to file BOI reports with FinCEN and are not subject to liability for failing to do so while the earlier Smith order remains in place. However, it also notes that business entities may voluntarily file their BOI reports if they choose.
In addition to the aforementioned court challenges, the CTA is facing opposition in Congress. Multiple bills have been introduced by Republican members of Congress to repeal the CTA. It remains to be seen as to whether these bills will receive enough support to be passed and signed into law. In the meantime, the future of the enforceability of the CTA remains in doubt.
Business owners who have not already filed their BOI reports with FinCEN should be prepared for the possibility of future enforcement as these cases and bills proceed. Business owners who have already filed their BOI reports should be aware that if the CTA is enforced in the future, they will need to update their BOI reports within 30 days if any of the applicable information on the reports (such as personal and business addresses and the identities of the beneficial owners) changes. For more information, please contact Mark W. Klein (mklein@brodywilk.com) or another BW attorney.
