Corporate Transparency Act: From Inception to Current Status

Corporate Transparency Act: From Inception to Current Status

The Corporate Transparency Act (CTA) was enacted in 2021 as part of the Anti-Money Laundering Act. Its goal? To combat financial crimes like tax fraud, money laundering, and the misuse of shell companies by increasing transparency in business ownership. The CTA introduced the Beneficial Ownership Information Report (BOIR), which requires many small businesses, LLCs, and corporations to disclose key information about their ownership and control.

Why Was the BOIR Introduced?

For years, bad actors have exploited corporate structures like shell companies to hide their identities, launder money, and conceal assets. These practices undermine economic prosperity and pose significant national security risks. By requiring businesses to file BOIRs, the federal government sought to prevent these crimes and create a more transparent business environment.

Filing Requirements

The BOIR initially required:

• Businesses formed before January 1, 2024, to file by January 1, 2025.
• Entities created in 2024 to file within 90 days of formation.
• After January 1, 2025, all entities were to file within 30 days of formation.

Why Was the CTA Blocked?

In December 2024, the U.S. District Court for the Northern District of Texas issued an injunction, temporarily halting enforcement of the BOIR requirements. The court found that the act raised significant concerns about federal overreach, as many argued it infringes on states’ rights to regulate business entities. This ruling has paused all deadlines for BOIR filing until further legal review.

What Does This Mean for Businesses?

For now, affected businesses have additional time to prepare for compliance while the courts determine the constitutionality of the law. No BOIR filings are required at this time, but this is subject to change based on future rulings.

Stay Informed

The legal landscape surrounding the Corporate Transparency Act continues to evolve. Businesses should stay updated to ensure compliance if and when the injunction is lifted.

For more details on the recent injunction and its implications, check out Forbes or KSM CPA.