Corporate Transparency Act Enforcement Suspended: What Texas Business Owners Need to Know

Texas small business owners have been closely following the Corporate Transparency Act (CTA) and its reporting requirements. This law, which took effect in January 2024, required many businesses to report beneficial ownership information (BOI) to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). However, recent legal developments have changed the landscape of CTA enforcement.

A federal court has ruled the CTA unconstitutional, and in response, the U.S. Treasury Department has announced that it will not enforce the law against U.S. citizens or domestic businesses. Here’s what you need to know about these recent changes and what they mean for your business.

The Corporate Transparency Act: A Quick Recap

The Corporate Transparency Act (CTA) was enacted to combat financial crimes by increasing transparency in business ownership. The law required many LLCs, corporations, and partnerships to disclose information about individuals who owned at least 25% of a business or had substantial control over it.

Business owners who failed to file BOI reports faced steep penalties of up to $10,000 and potential jail time. However, due to a recent court ruling, these requirements are now in legal limbo.

Court Ruling Declares CTA Unconstitutional

On March 1, 2024, a federal judge in Alabama ruled in National Small Business United v. Yellen that the Corporate Transparency Act is unconstitutional. The court determined that Congress exceeded its authority by requiring businesses to disclose personal ownership information.

While this ruling currently applies only to the plaintiffs in the case, it has set a precedent that could impact all small businesses across the country. Legal experts anticipate that the ruling will be appealed, but for now, the enforcement of the CTA has been put on hold.

U.S. Treasury Suspends CTA Enforcement

In response to the court ruling, the U.S. Treasury Department announced on March 2, 2025, that it will no longer enforce the CTA’s reporting requirements for U.S. citizens and domestic businesses. This means:

• No penalties will be imposed for missing CTA reporting deadlines.
• The March 21, 2025, deadline for filing BOI reports is suspended.
• Businesses are no longer required to update previously reported BOI information.

The U.S. Treasury will further be issuing a proposed rule that will narrow the scope of the rule to foreign reporting companies only. The U.S. Treasury has stated that it takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest. This decision provides relief for Texas small businesses and across the U.S. that were struggling to comply with the CTA’s complex reporting rules.

What Does This Mean for Your Business?

If you haven’t yet filed a BOI report, you no longer need to worry about meeting any upcoming deadlines. The Treasury Department’s announcement means that domestic businesses are no longer required to file or update their BOI reports.

However, since the CTA is still being litigated in federal courts, the situation could change in the future. Business owners should stay informed about potential updates to the law.

Should You Still Prepare for Possible CTA Compliance?

Even though CTA enforcement is suspended, it’s still a good idea to be prepared in case requirements change. Here’s what San Antonio business owners can do:

• Stay informed: Keep up with legal developments and any new rulings that could affect the CTA’s enforcement.
• Review your business structure: If you were previously required to file a BOI report, consider maintaining accurate ownership records in case compliance becomes necessary again.
• Consult with a business attorney: If you’re unsure about your business’s obligations, a business planning attorney can help you navigate the legal landscape.

Texas Small Business Owners Can Rely on Guidance from McCammon Law

If you have questions about business planning, compliance, or asset protection, McCammon Law is here to help. Request a Consultation for guidance on creating a plan that keeps your company compliant of Texas state and federal law and secure—now and in the future.

Reference: U.S. Chamber of Commerce (Aug. 27, 2024) “Corporate Transparency Act — What You Need to Know”