Nationwide Injunction on the Corporate Transparency Act (CTA): What It Means for Businesses

A recent ruling by a Texas federal court has placed a nationwide injunction on the enforcement of the Corporate Transparency Act (CTA), which mandates businesses to report beneficial ownership information (BOI) to the U.S. Financial Crimes Enforcement Network (FinCEN). This decision, effective as of November 30, 2024, temporarily halts BOI reporting requirements, creating uncertainty for affected businesses.

The CTA, enacted in 2021, requires certain businesses to disclose BOI to combat money laundering and promote transparency. Non-compliance can lead to significant penalties. However, critics argue the law imposes undue burdens on small businesses and raises constitutional concerns. The Texas court found merit in claims that the CTA may overstep federal authority, prompting the nationwide injunction​

Even amid the uncertainty caused by the injunction, filing your BOI report remains critical for several reasons:'

Prevent Penalties: Once the injunction is lifted, non-compliant entities could face retroactive penalties and enforcement actions.

Avoid Filing Rushes: Preparing your BOI report now allows you to avoid the last-minute rush once reporting deadlines are fully enforced.

Demonstrate Good Faith Compliance: Filing signals to regulators that your business operates responsibly and aligns with transparency efforts.

The injunction offers temporary relief but does not eliminate the CTA’s requirements permanently. Businesses should still complete their BOI and file this by December 31, 2024. The form takes only 15 minutes to complete. For detailed tax guidance tailored to your situation, contact MKHS Tax Group at info@mkhstaxgroup.com.