UPDATE: Corporate Transparency Act Suspended - What Freelancers Need to Know
By Terry Ann Donner, RN, JD, CCM, CSA
As of December 3, 2024, the deadline for many freelancers and small business owners to report certain business information under the Corporate Transparency Act (“CTA”) cannot be enforced due to the U.S. District Court’s decision in Texas Top Cop Shop, Inc., et al. v. Garland, U.S. Attorney General. The U.S. District Court determined that the CTA reporting rule is unconstitutional and issued a nationwide preliminary injunction. The result is that the Department of the Treasury’s January 1, 2025 deadline cannot be enforced and companies do not currently need to report beneficial ownership information.
What is the Corporate Transparency Act
Enacted in 2021, the CTA (§§ 6401-6403 of the National Defense Authorization Act) was created to prevent businesses from being used as a cover for criminal activities, such as money laundering, tax evasion and the financing of terrorism.
The CTA requires companies to report their Beneficial Ownership Information (“BOI”) to the United States Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) before January 1, 2025. This ownership information is to be kept in a database in each state so business owners can be identified to track criminal activity.
What Should You Do
The nationwide preliminary injunction does not make the CTA legislation go away. It simply suspends its enforcement. If you decide you will not file your BOI, and the injunction is removed by another Court, you may need to quickly file your BOI to comply.
If you choose not to file your BOI at this time, you will want to have the information you would have filed ready if the injunction is lifted, and you must file quickly.
You can choose to file even though the January 1, 2025 deadline has been removed by the U.S. District Court. If the injunction is lifted, you will be in compliance.
Nothing in this article is intended to be legal advice. Please contact your legal advisor if you have any questions regarding your compliance with CTA.
December 12, 2024
Donner Health Communications LLC
