Beneficial Ownership Transparency in United States Hits Roadblock

A Federal District Court Ruling Creates Uncertainty

A federal district court in Alabama has ruled that the Corporate Transparency Act (CTA) exceeds Congressional authority. This decision has left companies wondering about their reporting requirements under the CTA.

What is the Corporate Transparency Act?

The CTA requires certain companies to disclose information about their beneficial owners - individuals who ultimately own or control them - to the Financial Crimes Enforcement Network (FinCEN). FinCEN began accepting reports on January 1. However, a court injunction has temporarily halted enforcement against specific groups and individuals.

Key Points

• The CTA requires companies to disclose information about their beneficial owners to FinCEN.
• Reporting companies must file beneficial ownership reports as provided in FinCEN’s regulations.
• A federal district court in Alabama has ruled that the Corporate Transparency Act exceeds Congressional authority, prompting a lawsuit by small business groups.

Protect Yourself from Scams

Be cautious of correspondence requesting payment or asking you to click on suspicious links. These may be attempts to scam individuals into sending money or providing sensitive information. FinCEN does not send correspondence requesting payment to file BOI.

Next Steps

Despite the court ruling, companies are still required to comply with the law and file beneficial ownership reports. However, certain individuals and entities have been exempted from reporting requirements due to the lawsuit. Companies should consult FinCEN’s regulations and seek guidance if needed to ensure compliance.