Update on the Corporate Transparency Act

In December, the House passed a bill, H.R. 5119, the “Protect Small Business and Prevent Illicit Financial Activity Act” sponsored by Reps. Nunn (R-IA) and Beatty (D-OH) that would extend some deadlines for the Corporate Transparency Act (CTA).  It does not offer a lot of relief, but entities formed after 2024 would also have 90 days to report (up from the current version of 30 days). The House vote was 420-1.  Additionally, right before the congressional recess, on December 18, 2023, House Financial Services Chairman McHenry (R-NC), Rep. Davidson (R-OH), Sens. Scott (R-FL) and Rounds (R-SD) led 76 of their colleagues in sending a letter to the Secretary of the Treasury, requesting a delay in the implementation of new beneficial ownership reporting requirements for small businesses under the CTA.

Additionally, the National Small Business Association (NSBA) filed a lawsuit on November 15, 2022, challenging the reporting requirements set forth in the CTA and its accompanying regulations.  Oral arguments were heard by the Court more recently on November 20, 2023, but the Court has yet to rule.

As of today, however, nothing has changed. The law and regulations are still the same from our previous alerts.  Under the new requirements of the CTA companies must disclose the identities and other information about anyone who owns a stake of at least 25% or exercises significant control over the company.  Existing companies have until the start of 2025 to file their disclosures. Companies created or registered in 2024 have 90 days to comply.  Companies created or registered in 2025 will have 30 days to comply.

Barring new legislative or court action, the CTA continues to be implemented and enforced.  Our continued advocacy will be to urge the Senate to adopt the bipartisan Beatty/Nunn bill, but that only slows implementation at this point.