February 19, 2025 – Dear Client:
Over recent months, we have reported to you on numerous court decisions affecting the enforceability of the Corporate Transparency Act (“CTA”) and its requirement for Reporting Companies to report Beneficial Owners (the “Reporting Rule”) to the Financial Crimes Enforcement Network (“FinCEN”). On February 18, 2025, the United States Court of Appeals for the Fifth Circuit lifted the only remaining injunction1 preventing CTA enforcement. This decision was in accordance with the Supreme Court’s January 23, 2025, decision granting the government’s application of a stay in Texas Top Cop Shop, Inc. v. McHenry.
As of today, the CTA is in force and FinCEN has set a new deadline to comply with the Reporting Rule of March 21, 2025. We recommend that all Reporting Companies and Beneficial Owners prepare to file in accordance with this deadline.
We note that on February 10, the U.S. House of Representatives passed the Protect Small Businesses from Excessive Paperwork Act (H.R. 736) unanimously, with a 408-0 vote. Under the bill, existing entities that are “a small business concern”, as defined under 15 U.S.C. 632, would have until January 1, 2026, to comply with the Reporting Rule. The bill would not become effective unless passed by the Senate and signed by the President.
We will continue to keep you updated on any further changes to the CTA.
Sincerely,
Kudman Trachten Aloe Posner LLP
About Kudman Trachten Aloe Posner LLP
Kudman Trachten Aloe Posner LLP is a full-service commercial firm that focuses on commercial transactions, buy- and sell-side mergers and acquisitions, corporate finance, white collar criminal defense and complex commercial litigation, including bankruptcy and creditors’ rights, healthcare fraud, waste and abuse, commercial and governmental reimbursement, and day to day corporate work, including tax, intellectual property, real estate and employment law. See https://www.kudmanlaw.com for more information.
