The Corporate Transparency Act (the “CTA”), which took effect on January 1, 2024 and requires many entities to file sensitive information about ownership and control (and the individuals who own and control such entities) with the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”), was held unconstitutional by a federal district court in Alabama on March 1, 2024.
The ruling only applies to the plaintiffs in that case, and the ruling likely will be appealed. Without further guidance (either from the courts, or from FinCEN itself), what this ruling means for other reporting entities is unclear. If an entity was formed prior to January 1, 2024, it has until January 1, 2025 to complete its CTA filing – so those entities may wish to pause any filings to see what further guidance becomes available before the end of this year. For entities formed in 2024, CTA filings are required within 90 days of formation – so in the absence of further information and to avoid costly penalties that will accrue for not timely filing, entities should consider filing before the 90 days expire. As always, please consult with your legal and tax professionals to determine what’s right for you.
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