A major win for Small Business over the Corporate Transparency Act (CTA) this week.
UPDATE | Review FinCEN's updated Frequently Asked Questions on the current injunction over the CTA here. While the ruling rendered the filing requirements to voluntary submissions, this is a developing matter. Follow NSBA as we continue closely tracking updates on the CTA.
In a major win for NSBA members and small-business owners across the country, the U.S. District Court of the Eastern District of Texas imposed a temporary injunction against the Corporate Transparency Act (CTA) on Dec. 03. This ruling nullifies the Jan. 1, 2025, deadline for small businesses to file their Beneficial Ownership Information (BOI) reports to the Financial Crimes Enforcement Network (FinCEN) – for now.
While this is temporary, things are constantly changing. What it means as of Dec. 4, 2024, is that ALL small businesses do NOT have to file their BOI reports by Jan. 1, 2025.
As background, NSBA filed its lawsuit back in November 2022, the first suit to be filed over the CTA. Since we made arguments in late-2023, several other lawsuits have popped up that mirror our suit and arguments. One such suit was the one filed in Texas, which was decided on the same exact merits as the NSBA lawsuit—that the CTA is unconstitutional. The key difference being that the District Judge in the NSBA case was not willing to extend a nationwide injunction, whereas the Texas District Judge did.
NSBA is taking this injunction as a win—with the major caveat that things may change. Very likely the government will file for an emergency stay of the injunction issued on Dec. 3, which will be heard by the Fifth Circuit Court of Appeals. Should anything change, we will immediately notify members and the small-business community.
Furthermore, NSBA’s suit is still awaiting a ruling from the Eleventh Circuit Court of Appeals. Where this leaves the NSBA case—as well as the other mirroring lawsuits—is that the Supreme Court will very likely get involved given the differing rulings from various courts across the country.
While today is a good day for small business, unfortunately, there is no more clarity or predictability when it comes to the outcome of filing BOI reports. The uncertainty over the rule and when and/or if small businesses will ultimately have to comply is deeply concerning, especially given potential fines of up to $591 per DAY and up to two years of jail time.
NSBA President and CEO Todd McCracken shared the following on the CTA:
“NSBA has been leading the charge against the CTA for years, so, for today, we will take a minute to recognize the leading role we have played and applaud the temporary injunction. However, there still exists confusion and massive concern about the BOI reports, and it is our hope that Congress will intervene and provide America’s smallest businesses with some clarity by passing legislation to delay the CTA for at least one year.
“NSBA will continue to fight, both through our lawsuit and working with the bipartisan group of lawmakers working to delay the CTA. The various lawsuits working their way through the courts are a critical step in preventing a bad law from going into effect, however Congress has the power TODAY to right this wrong by passing legislation to delay and ultimately repeal the CTA.
“No small-business owner should be spending time during the holidays worrying about a simple mistake landing them in jail—this injunction is a major win, but the battle continues.”
NSBA is cautioning NSBA members and nonmembers alike that things are continually changing when it comes to the BOI reporting. We will continue to update everyone in the NSBA orbit – be sure you’re following us on social and subscribe to our Weekly Advocate newsletter.
Please take a few moments TODAY to complete the NSBA Action Alert on the CTA to urge Congress to act to repeal or delay the CTA – it will take less than two minutes to send this letter your Members of Congress, and they need to hear from you.
