The Corporate Transparency Act (CTA), enacted in January 2021, introduced new reporting requirements for certain U.S. companies, including family-owned LLCs and LPs. These entities must report details about their beneficial owners (individuals who own or control the entity) to the Financial Crimes Enforcement Network (FinCEN).
While companies formed before January 1, 2024, originally had until the end of the year to file their reports, a recent federal court decision has temporarily halted enforcement. In the case Texas Top Cop Shop, Inc., et al. v. Garland, et al., Case No. 4:24-cv-478 (E.D. Tex.), a nationwide preliminary injunction was issued, preventing the government from enforcing the CTA’s requirements.
This pause provides temporary relief for affected entities, but the legal future of the CTA remains uncertain. For companies that have already filed, no further action is required. However, for those that have not, the question arises: should you proceed with filing now to avoid a potential rush if the injunction is lifted, or wait for further legal clarity?
We recommend impacted entities consult their legal advisors to confirm their reporting obligations and determine the best course of action. While waiting may reduce immediate costs, it is important to be prepared should compliance deadlines be reinstated on short notice.
At IEQ, we are committed to keeping clients informed of regulatory changes. Please note, however, that IEQ and its employees do not provide tax, legal, or professional advice. Clients should consult their legal and tax advisors for guidance specific to their circumstances.
This material has been created for educational and informational purposes only and is subject to change. Any discussion of tax issues contained in this analysis are general in nature and is provided for informational purposes only. It may not be suitable for all investors. Information has been obtained from sources believed to be reliable, but its accuracy and completeness are not guaranteed. Please consult your legal and tax advisors before taking any action that may have tax or legal consequences and to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared.
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