Corporate Transparency Act: Five Things Businesses Should Know

If you are a business owner, the question of whether or not you are required to file a beneficial ownership information report (BOIR) under the Corporate Transparency Act (CTA) is probably as clear as mud. A December 3 injunction from the District Court for the Eastern District of Texas in the case of Texas Top Cop Shop, Inc. v. Garland nullified enforcement of the CTA. On December 23, 2024, a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit issued a stay on that ruling and the Financial Crimes Enforcement Network set a deadline of January 13, 2025. Then on December 26, 2024, the full Fifth Circuit Court reversed the three-judge panel’s decision, making this new deadline nonenforceable for now.

Even with all this back and forth in the courts, a BOIR may seem daunting, but it is actually pretty simple. Here are answers to five common questions.

1. What is the CTA?

The CTA is a law established in the Anti-Money Laundering Act of 2020, which was intended to modernize the country’s efforts to deter money laundering and counter the financing of terrorism. It requires businesses to report their beneficial owners, i.e., the people who ultimately own or control the company, to prevent businesses from being used for money laundering or other illegal activities.

2. Why should I file my BOIR?

If the courts ultimately rule that the CTA is enforceable, then people who do not report their BOI could face fines and other criminal penalties. They could be up to $10,000 in fines and/or two years in prison.

3. Where do I report my BOI?

The Financial Crimes Enforcement Network offers a free website for filing your BOIR. To file your report, go to BOI E-Filing System.

4. What information do I need to file?

You will need basic information about your business, including its legal name, address, and tax ID number, as well as details about each beneficial owner, such as their full name, date of birth, address, and a valid ID number.

5. Do businesses currently have to report their BOI?

As of this writing, businesses do not have to file their BOIR. The Financial Crimes Enforcement Network’s website states: “Please note that beneficial ownership information reporting requirements have been affected by a recent federal court order. The Department of the Treasury is appealing that order. In the meantime, reporting companies are not currently required to file a BOIR and are not subject to liability if they fail to do so while the applicable order remains in force. However, reporting companies may still opt to file a BOIR.”

It is, of course, every individual business owner’s decision on whether or not to go ahead and file their BOIR ahead of the court’s ruling. That being said, doing so will take very little of your time and it may be worth going ahead and reporting so you do not have to continuously follow the legal status of the CTA.