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Overview:
A recent ruling by the U.S. Supreme Court has added a new twist to the ongoing legal challenges surrounding the Corporate Transparency Act (CTA). While this decision reinstates the law, a separate nationwide injunction issued by a Texas federal judge (Smith v. U.S. Department of the Treasury) remains in effect. As a result, companies are temporarily exempt from filing beneficial ownership information (BOI) and won’t face penalties for non-compliance at this time.

Background:
The CTA, enacted by Congress in 2021, was designed to crack down on financial crimes by requiring companies to disclose detailed ownership information to the Financial Crimes Enforcement Network (FinCEN). However, the law has been criticized for its overly broad requirements and the risks it poses to small businesses and sensitive personal information.

Why It Matters:
The CTA imposes new and complex reporting requirements for businesses. Failure to comply carries significant consequences, including:

  • Daily fines exceeding $590,
  • Criminal penalties, including felony charges, and
  • Up to two years in prison.

FinCEN estimates that more than 30 million businesses will need to comply annually, with millions more impacted as new entities are formed.

Current Status:
Although enforcement is temporarily on hold, this situation remains fluid. Courts could lift the injunction, allowing the government to enforce the law. Alternatively, ongoing legal challenges or legislative action could result in modifications or a repeal of the law.

What Businesses Should Do:

  • Stay informed about developments related to the CTA.
  • Consult with legal or tax professionals for advice on potential compliance requirements.
  • Prepare for the possibility of enforcement while monitoring any changes to the law.

Our Advocacy Efforts:
The Lansing Regional Chamber of Commerce is working closely with the Michigan Chamber of Commerce and the U.S. Chamber of Commerce to advocate for reasonable solutions that address the concerns of businesses. This includes supporting efforts to delay the compliance deadline and calling for amendments to ensure the law does not create unnecessary burdens on small businesses.

Where to Find Help:

For questions or further assistance, contact the Lansing Regional Chamber team