BREAKING NEWS | A last minute order from the Fifth Circuit has vacated an order granting a stay of the district court’s preliminary injunction barring the government from enforcing the Corporate Transparency Act (CTA).
At this time, the latest action from the court means the nationwide injunction over the CTA is back on, with the original district court injunction barring FinCEN from enforcing the BOI reporting requirements remaining in force.
This is a developing matter. NSBA continues advocating for full repeal of the CTA, including through bills from Capitol Hill and in the courts.
Nationwide CTA injunction Rescinded
FinCEN Extends Some CTA Deadlines
Fifth Circuit Order Reverses Injunction Cancellation
The Corporate Transparency Act
CTA | Not the Way
On Friday, March 1, 2024, the U.S. District Court of Northern Alabama ruled in NSBA’s favor, halting enforcement of the CTA for NSBA members.
While we support the goal of stemming money laundering, this law is not just bad policy, it is unconstitutional. Failure of a small business to comply—intentional or not—could result in up to $10,000 in fines and up to two years in prison.
Furthermore, the information is already being collected and would simply require collaboration between FinCEN and the IRS.
The CTA is yet another example of someone who should be doing the work, shirking their responsibility, and dumping the problem at the feet of small business.
Think the CTA doesn't affect you?
THINK AGAIN.
SURVEY | The CTA - What It Means for Small Business
Among key data from NSBA's Member Survey on the CTA: the average small-business owner is looking at compliance costs of nearly $8,000 - in the first year alone.
What is the law being challenged?
The Corporate Transparency Act (CTA), which would create a national registry of owners of small businesses and millions of other entities formed under State laws. This law was passed by Congress in 2021 as part of the National Defense Authorization Act (NDAA).
What does the Corporate Transparency Act do?
The CTA significantly changes the requirements of who is responsible for providing personal information to the federal government ostensibly to combat money laundering. The law requires small businesses to provide information to the federal government, specifically the U.S. Department of Treasury’s financial-intelligence unit--Financial Crimes Enforcement Network (FinCEN), for each "beneficial owner" defined vaguely as any individual with "substantial control" or "applicant" for a corporation or entity formed under State laws.
What is FinCEN’s role under the CTA?
FinCEN has been charged with promulgating the rules to implement the CTA. FinCEN's reporting rules were made public on Sept. 29, 2022, and will go into effect on Jan. 1, 2024.
What are the issues surrounding the CTA for small businesses and nonprofits?
The CTA will create a cumbersome reporting process for small businesses that are rarely equipped with compliance teams or staff attorneys. This was previously handled effectively by the banks, under Customer Due Diligence (CDD) rules, when small businesses opened or maintained their bank accounts.
NSBA | STANDS WITH SMALL BUSINESS
And we aren't alone. The Main Street business community supports NSBA’s efforts to protect small businesses from the CTA.
EXTRA, EXTRA coverage on NSBA's suit against FinCEN and the Treasury to protect small business from the undue effects of the CTA in its proposed current form. Read all about it.
CTA : NOT THE WAY
Read the fine print of the CTA, including its regulations, here.
If you think CTA doesn't affect you - think again. Read more about our partners and supporters, and join our efforts.