The Corporate Transparency Act (CTA), which requires businesses to disclose their true ownership to combat shell companies, has faced another setback. The Fifth Circuit Court of Appeals has reinstated an injunction that delays the January 1st reporting deadline, effectively putting the law’s implementation on hold.
The law, passed in 2021, would affect over 32 million small businesses nationwide, requiring them to file beneficial ownership information with the Treasury’s Financial Crimes Enforcement Network (FinCEN). While supported by anti-corruption advocates, business groups have criticized it as burdensome and invasive.
The legal situation has created significant uncertainty for business owners. While FinCEN initially extended the deadline to January 13th following an earlier court decision, the latest ruling means businesses are not currently required to file ownership information, though they may do so voluntarily. The Treasury Department maintains the law is constitutional and continues to pursue its appeal, but the situation remains fluid as the case moves forward for further consideration by the court’s merits panel.
The back-and-forth nature of these legal proceedings has created confusion in the business community about compliance requirements, with legal experts noting that many companies are unclear about their obligations under the CTA. This uncertainty particularly affects both domestic and reporting companies trying to navigate their compliance responsibilities.