Update: Deadline Extended to January 13, 2025. Appellate Court Reinstates Corporate Transparency Act Reporting Requirements
RAFE MORRISSEY
Dec 23, 2024
UPDATE: Deadline extended to January 13, 2025.
Today the Fifth Circuit Appellate Court ruled in favor of the federal government reversing a nationwide injunction against the Corporate Transparency Act. (CTA) This restores the CTA’s reporting requirements which will once again be back in full effect. Approximately 20 million entities have not yet submitted their filings and now have just a few days to do so.
The injunction that had been in place was ordered by a Texas court finding that the CTA is “likely unconstitutional” and that Congress went beyond its authority in enacting the statute. The government quickly requested that the injunction be stayed pending a final ruling.
More than a dozen organizations and 25 states, filed amicus briefs urging the Fifth Circuit to keep the injunction in place arguing that doing so would give millions of businesses more time to learn about their new filing obligations while giving the courts time to make a final ruling. As a practical matter, lifting the injunction this close to the filing deadline also presents a logistical challenge for countless businesses who are now once again subject to the penalties for failure to file.
Opponents of the CTA are preparing to work with the incoming Trump Administration to delay the filing deadline administratively to help new incorporations and those businesses that failed to file but success cannot be guaranteed and the new administration will not be in place until January 20 but the filing deadline is January 1st.
The NFIB is expected to appeal the Fifth Circuit Court decision. Reports indicate an expedited appeal hearing on the stay is already being prepared, but that hearing is unlikely to occur before the end of the year.
Today’s court order arguing that the government is likely to succeed in its defense of the CTA was written by two Democrat judges and might not reflect the views of the full Fifth Circuit or the Supreme Court but this is yet to be determined.
Additionally, the Eleventh Circuit, which is considering the government’s appeal of the North District of Alabama District Court decision that the CTA is unconstitutional has yet to rule and that decision could come down any day now, so circumstances could once again change but for now, the reporting requirement is in force.
NNA members should consult their tax preparers to determine the best course of action and any new developments will be reported promptly.
