OFF AGAIN, ON AGAIN: THE CORPORATE TRANSPARENCY ACT FUSS
March 20, 2025
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Back-and-forth relating to the constitutionality of the Corporate Transparency Act (“CTA”) continues after a federal judge in Texas granted the federal government’s motion on February 18, 2025 to stay his nationwide injunction pending appeal. In short, the CTA and its reporting obligations are once again enforceable against reporting companies and in a further development on February 19, 2025, the Financial Crimes Enforcement Network (“FinCEN”) responded to the court decision by extending the reporting deadline for most reporting companies until March 21, 2025. However, FinCEN will determine over the next few weeks whether further deadline modifications are warranted to reduce regulatory burdens on small, low risk businesses. Around the same time as the decision in Texas, another federal judge in Maine ruled that the CTA was constitutionally justified. For those keeping score at home, there are now appeals pending in the Fourth, Fifth, Ninth, and Eleventh circuits with two of those four district court decisions concluding that the CTA was likely constitutional. Many legal observers forecast a circuit split on the constitutional issue. If correct, nine justices on the Supreme Court of the United States will likely decide the outcome unless U.S. lawmakers repeal the statute or extend the compliance deadline prior to judicial adjudication.
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