Happy New Year 2025… Here we go!  In last week's Freedom Friday blog and email newsletter, I shared four (4) keys for success in your small business in the new year.  The first one was regarding the CTA, and within 24 hours of publishing, the Fifth Circuit once again released a new decision, and now, once again, CTA filing is completely voluntarily.  It is this lawyer's position that the CTA is unconstitutional, which is sadly not a view shared widely by fellow attorneys.  Ironically, I got several calls from former and current clients regarding CTA filing, and then as soon as I explained the “status quo,” it changed once again.

You might be asking what the CTA is.  CTA stands for the Corporate Transparency Act, which is actually federal law.  It was enacted in 2021 as part of the NDAA reauthorization in January of that year.  Unfortunately, many Republicans voted for this measure.  However, this measure passed as another federal way to fight anti-money laundering.  Also unfortunately, if you currently have an LLC, or you plan to form an LLC this year (or any other similar business entity), the CTA requires additional reporting requirements to the federal government.  The CTA requires a significant number of companies to file a report with the Financial Crimes Enforcement Network (FinCen) which provides information about each of the “beneficial owners” of the company, the person(s) responsible for forming the company if formed after January 1st, 2024, and other information regarding the company's legal name, address, jurisdiction of formation, and taxpayer identification number (TIN).

Before the current litigation and appeal in the Eastern District of Texas and now the Fifth Circuit Court of Appeals, any LLC formed before January 1st, 2024, had until January 1st, 2025 to file their beneficial ownership information (BOI) report with FinCen.  If the company was formed in 2024, the BOI report was due within 90 days of formation.  If the company was formed after January 1st, 2025, then the BOI report would be due within 30 days.  However, a recent case which is now before the Fifth Circuit has put all the new filings on hold.  Several weeks ago, the Eastern District of Texas issued a nationwide injunction against the CTA.  This was appealed by the Biden administration to the Fifth Circuit Court of Appeals, and on December 23rd, 2024, the Fifth Circuit issued a stay of the nationwide injunction. 

However, to make matters more confusing, on December 26th, the merits panel of the Fifth Circuit vacated the December 23rd ruling and reinstated the nationwide injunction in order to “preserve the constitutional status quo while the merits panel considers the parties' weighty substantive arguments.”  Meanwhile, on December 31st, the Biden administration asked the U.S. Supreme Court to intervene and issue an emergency order reinstating the CTA while the federal government continues its appeal of the Eastern District of Texas's ruling in the Fifth Circuit.  The U.S. Supreme Court is yet to rule on this matter, so for now, CTA filings are completely voluntary.

Thinking about starting a small business?  Or maybe your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth?  Please contact me at [email protected] to schedule a FREE strategy session.

For more information about Liberty Legal Solutions, LLC, please visit our website at http://www.libertylegalok.com/