Earlier this year, we discussed the Corporate Transparency Act (the “CTA”), its filing requirements and penalties for non-compliance.
In brief, the CTA requires certain entities (“Reporting Entities”) to report certain information to the Financial Crimes Enforcement Network (“FinCen”). There are, however, exceptions that may exempt some Reporting Entities from this requirement.
Since the CTA was passed into law, the CTA was declared unconstitutional[1]. Specifically, the court concluded that the CTA is unconstitutional because it exceeds Congress’ enumerated powers. The court enjoined the government from enforcing the CTA solely against the plaintiff’s membership.
Despite the narrow unconstitutional decision, the CTA is still applicable and active to other entities. As a reminder, Reporting Entities formed before January 1, 2024 must report information regarding their ownership by December 31, 2024. This deadline is fast approaching. Failure to comply with the CTA may result in significant penalties. Reporting Entities that fail to report will face penalties of up to $500 per day.
All entities, regardless of formation date, should ensure compliance with the CTA. Frier Levitt can assist entities determine whether they are exempt from reporting or, if required, can help facilitate making the necessary filings. Do not wait until December – ensure your compliance now.
[1] National Small Business United et al. v. Yellen et al., No. 5:22-cv-01448, Dkt. 51 (N.D. Ala. 2024).
