On December 25, 2024, it was reported that the Corporate Transparency Act (CTA)’s filing requirements have been reinstated, following a decision from the Fifth Circuit Court of Appeals. This ruling affects small businesses nationwide, requiring them to report ownership information to the Financial Crimes Enforcement Network (FinCEN). According to the National Federation of Independent Business (NFIB), the reinstatement demands that small businesses submit beneficial ownership reports to FinCEN, a requirement that was previously halted by a lower court’s ruling which deemed the CTA unconstitutional. The Small Business Administration (SBA) has expressed concerns about the burden this places on small entities, with SBA Administrator Isabella Casillas Guzman stating, “Small businesses should not have to navigate additional barriers that distract from their core operations.” The CTA mandates that businesses with fewer than 20 employees and less than $5 million in revenue are subject to these filing requirements. This ruling could change the compliance landscape for small businesses as they will now need to gather and report detailed information regarding their ownership structure, potential investments, and other sensitive data to FinCEN. NFIB’s Vice President of Public Policy, Amanda Austin, commented, “Our members are concerned about increased compliance costs and the potential for penalties for non-compliance. We are calling on Congress to act to alleviate this burden.” The reinstatement is expected to draw a mixed response from the business community, with some supporting enhanced transparency to combat financial crimes, while others view it as an undue regulatory imposition.
Corporate Transparency Act Filing Requirements Reinstated: Implications for Small Businesses
