Small businesses are not currently required to file ownership reports under the Corporate Transparency Act (CTA), despite a recent U.S. Supreme Court decision allowing the government to enforce the law. The Financial Crimes Enforcement Network (FinCEN) clarified that a separate court order is still blocking enforcement of the rule.
The CTA, an anti-money laundering law, requires businesses to report information about their beneficial owners—individuals who own or control 25% or more of the entity or hold substantial control. Reports must include names, birthdates, addresses, and identification numbers, such as from passports or driver’s licenses. Noncompliance can lead to fines of $591 per day. However, businesses with more than 20 employees, $5 million in annual revenue, and a U.S. office are exempt from these requirements.
The CTA has recently been tied up in legal battles. In December 2024, a Texas federal judge issued an injunction halting the law, ruling that it was likely unconstitutional. On January 23, 2025, the Supreme Court lifted that injunction, but another nationwide injunction issued by a different Texas judge on January 7, 2025, remains in effect, leaving the rule unenforceable for now.
FinCEN emphasized that while the law is blocked, businesses will not be penalized for failing to file reports but are allowed to submit the information voluntarily. Oral arguments for the appeal of the case are scheduled for March 2025 in the U.S. Court of Appeals for the Fifth Circuit. The ongoing legal challenges center on the constitutionality of the law and the scope of federal court powers, particularly concerning nationwide injunctions.
To recap: the CTA is an anti-money laundering law that requires businesses to report information about their owners, including names, addresses, birthdates, and ID numbers (the Beneficial Ownership Information Report or BOIR). Companies that don’t comply could face fines of $591 per day. Legal challenges have stalled enforcement of the law. One Texas court blocked the rule in December 2024, calling it likely unconstitutional. While the Supreme Court lifted that block, another judge’s injunction is still in place, meaning the rule is not currently being enforced.
