Legal Update and Action Steps for Business Owners
On February 17, 2025, U.S. District Judge Jeremy Kernodle lifted the preliminary injunction that had previously blocked the enforcement of the CTA. This decision reinstates the reporting obligations for certain business entities.
Following Judge Kernodle’s ruling, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced a thirty-day extension of the filing deadline for most companies to March 21, 2025, to allow businesses more time to comply.
We believe that CTA’s reporting requirements may continue to evolve. Congress is considering legislation to revise aspects of the CTA. The U.S. House of Representatives unanimously passed a bill to delay the reporting deadline until January 1, 2026 for businesses formed before January 1, 2024. The bill is currently in the Senate for review. FinCEN has also indicated it will assess its options to further modify reporting deadlines and intends to take steps to reduce the compliance burdens for reporting companies that it sees as low risk. However, there is no guarantee that either of these possible changes will take effect before the March 21, 2025 deadline, if ever. We encourage reporting companies to take the below steps regarding compliance with the CTA.
Action Items for Business Owners
In light of these developments, we recommend that business owners take the following steps promptly:
Review Ownership Structures:
- Identify all beneficial owners, including individuals with direct or indirect control over the company.
- Document why those individuals meet the definition of a beneficial owner.
Prepare to Submit Reports to FinCEN:
- Gather the necessary information for each beneficial owner, including full legal name, date of birth, residential or business address, and a unique identifying number from a government-issued ID or passport.
- Submit the beneficial ownership report to FinCEN by March 21, 2025 (or a later date if Congress, a court, or FinCen provides a later date for businesses such as yours).
Implement Systems for Ongoing Compliance:
- Establish procedures to monitor and report any changes in beneficial ownership promptly.
- Designate responsible personnel to oversee compliance with the CTA.
Consult with Legal Counsel:
- Seek legal advice to answer questions about the CTA and to address any specific concerns related to your business.
Please contact Eleanor Nordholm or your regular Wyche attorney for more information about Corporate Transparency Act compliance.
