News and Updates

The Corporate Transparency Act (CTA), effective as of January 2024, requires many U.S. small businesses to report ownership details to the government. Businesses that qualify must file reports detailing beneficial ownership information report (BOIR). The original deadline for most eligible businesses to comply was January 1, 2025. Failure to meet this deadline—or to update information as required—could result in fines up to $10,000, civil penalties of $591 per day, and even imprisonment of up to two years.

As of December 24, 2024, Texas Federal Court has halted the enforcement of the Corporate Transparency Act beneficial ownership information reporting requirements. This nationwide preliminary injunction will remain in effect until legal proceedings conclude, meaning businesses are not currently obligated to comply with the reporting mandates. 

The Texas Federal Court granted this injunction, citing potential constitutional concerns with the CTA’s BOIR requirements. The court determined that the act may cause sufficient harm to warrant suspending its enforcement. Without this injunction or an applicable exemption, the CTA mandates all U.S.-registered legal entities to disclose information about their beneficial owners and individuals with significant control to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury.

This pause has brought relief to approximately  32.6 million businesses preparing to meet these new obligations. Many companies were still assessing their reporting requirements and collecting the necessary documentation when the injunction was issued. While the injunction temporarily suspends reporting requirements, the CTA's legal status remains unresolved. TW Business Service will continue to monitor this evolving situation and provide updates as new information becomes available.