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A U.S. District Court issued a ruling this week, which ordered the federal government to suspend the enforcement of the Corporate Transparency Act (CTA) nationwide.
What Happened:
- On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction, which temporarily precludes the enforcement of the CTA.
- The ruling was granted in a lawsuit, which challenged the constitutionality of the CTA, Texas Top Cop Shop, Inc., et al. v. Merrit Garland, Attorney General of the United States, et al.
- In its ruling, the Court granted the nationwide preliminary injunction on the grounds that the CTA is “likely unconstitutional.”
Updated Guidance on Requirements and Obligations for Business Owners Under the Corporate Transparency Act
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As of January 1, 2024, domestic and foreign businesses must comply with new federal regulations under the Corporate Transparency Act (the “CTA”). These new CTA rules require that business entities file Beneficial Owner Information reports that include the details as to their “beneficial owners” to the Financial Crimes Enforcement Network (“FinCEN”).
Throughout 2024, FinCEN has periodically provided updated guidance and clarification on how businesses can ensure they are in compliance with the CTA. This guidance is provided in the form of a comprehension Frequently Asked Questions document, which was last updated by FinCEN in July 2024.
WHAT YOU NEED TO KNOW.
The primary obligation placed on businesses who must comply with the CTA, is the filing of a Beneficial Owner Information (BOI) report with the FinCEN. In this alert, we will review the essential elements of the regulations and guidance issued by FinCEN, including:
- Does your business have to comply with the CTA?
- What steps does your business need to take to comply with the CTA?
- How does your business file a Beneficial Owner Information (BOI) report?
- How do you ensure your business is in compliance with the CTA?
New York State Updates “Essential Business” Guidelines
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As detailed in a previous Special Alert from Lipsitz Green Scime Cambria, Governor Andrew Cuomo signed the “New York on Pause” Executive Order, effective as of March 22, 2020, which required a 100% workforce reduction for any business or organization that is not “essential.”
On April 9, 2020, Empire State Development (ESD) updated its guidelines by further clarifying and expanding the scope of businesses considered “essential” (Essential Business). Prior guidance issued by the ESD is now superseded by revised guidelines issued by the ESD yesterday and summarized below.