Dear CFA Members,

With less than a month to go before the Corporate Transparency Act’s (CTA) year-end filing deadline, a federal court yesterday issued a nationwide injunction that halts enforcement of the new reporting regime. It’s a massive win for CFA members and all small-business owners – many of whom were recently made aware of the reporting requirements.

The CTA took effect this year and required small businesses and other covered entities to report – and regularly update – the personal information of their owners and managers to the Financial Crimes Enforcement Network (FinCEN) at the Treasury Department. The CTA required an estimated 32.6 million existing business entities to disclose their beneficial owners to the Treasury Department’s FinCEN before 2025.

The lawsuit, filed by the National Federation of Independent Business (NFIB) and several small businesses, alleged that the CTA falls outside of Congress’s powers to regulate interstate and foreign commerce because it regulates incorporated entities regardless of whether they engage in commercial activity. The government argued that the law’s function — to crack down on anonymous shell companies and deter money laundering, terrorism financing and other illicit economic activity — falls within Congress’s regulatory duties.

It is unknown whether FinCEN will appeal the decision. The agency previously appealed a similar decision which limited a preliminary injunction to members of the National Small Business Association; that appeal is currently pending in the 11th Circuit.

This means that the year-end filing deadline is no longer enforceable. However, that may change as the case moves through the court system. 

CFA will keep you updated.