Ready, Set, Go! – The CTA is Back!
What has happened?
On February 17, 2025, the United States District Court for the Eastern District of Texas Tyler Division (the “District Court”) issued a stay of the Preliminary Injunction issued by the District Court on January 7, 2025 (the “Stay”).
The Stay blocks the enforcement of the District Court’s Preliminary Injunction until the disposition of the appeal of the District Court’s Preliminary Injunction.
What does this mean?
With the implementation of this Stay, the federal government is no longer barred from enforcing the Corporate Transparency Act (“CTA”) and the implementing regulations of the CTA (“Reporting Rule”).
Reporting companies will have until March 21, 2025 (the “Deadline”), to provide beneficial ownership information reports as required under the CTA and the Reporting Rule.
FinCEN issued updated guidance indicating its intent to revise the Reporting Rule to reduce the burden for “lower-risk entities,” including many U.S. small businesses. As of the publication of this article, no guidance has been issued indicating what entities might be considered lower-risk. FinCEN intends to provide updates prior to the Deadline regarding any further modifications.
This Stay is not a final decision regarding the constitutionality of the CTA. Litigation remains ongoing in the Fifth Circuit, where this appeal will be heard, and around the country regarding the constitutionality of the CTA.
What is next?
McGrath North will provide assistance with compliance as requested and continue to monitor this fluid situation in order to provide updates as necessary. If you have any questions or if you need any assistance with CTA compliance, please don’t hesitate to contact your McGrath North attorney.
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