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CTA Update: Reporting Rule Back on Hold After Latest Court Decision

CTA-Corporate-Transparency-Act

CTA-Corporate-Transparency-ActIn yet another round of government and legal “ping pong” regarding the Corporate Transparency Act (CTA) and its reporting rule for beneficial ownership information (Reporting Rule), the Fifth Circuit has reversed its December 23, 2024 order, meaning the CTA and Reporting Rule are once again paused.

As we shared in our recent blog post, on December 23, 2024, the Fifth Circuit Court of Appeals granted the government’s motion to stay a preliminary injunction while the appeal on the constitutionality of the CTA and Reporting Rule continues. This ruling reinstated the CTA’s enforcement and set a January 1, 2025 deadline for existing reporting companies to file beneficial ownership information (BOI) reports, prompting the Financial Crimes Enforcement Network (FinCEN) to extend filing deadlines for most companies to January 13, 2025.

However, in an unexpected turn, the Fifth Circuit reversed its decision on December 26, 2024, effectively pausing the CTA and its Reporting Rule once again. As of now, reporting companies are not required to file BOI reports. The Fifth Circuit provided limited reasoning for the reversal, stating:

“The merits panel now has the appeal, which remains expedited, and a briefing schedule will issue forthwith. However, in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments, that part of the motions-panel order granting the Government’s motion to stay the district court’s preliminary injunction enjoining enforcement of the CTA and the Reporting Rule is VACATED.”

In addition, FinCEN posted a response to the latest reinstatement of the national injunction, and consistent with prior postings they are saying compliance is currently allowed but not required.

“In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”

With the latest decision, deadlines remain in flux, and further legal developments could alter the enforcement status of the CTA. An oral argument on the CTA’s constitutionality is scheduled for March 25, 2025, leaving it uncertain whether the stay will remain in effect until then. Given this uncertainty, we encourage you to consult legal counsel to understand how these changes may impact your specific situation. Additionally, it’s wise to have your beneficial ownership information prepared for filing, should the CTA and Reporting Rule be reinstated.

As this unprecedented legal saga continues to unfold, look to Bridgeford Trust Company for updates on this rapidly evolving situation. Visit our CTA Resource Page for the latest information, and if you have any questions or need assistance, please reach out to us via our contact form or by calling (605) 224-9189.

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Urgent Corporate Transparency Act Update: Reporting Rule Back in Effect

CTA-Update 12.24.24

CTA-Update 12.24.24As we shared in previous updates and summarized on Bridgeford’s CTA Resource Page, the legal landscape surrounding the Corporate Transparency Act (CTA) continues to evolve rapidly. Most recently, on December 23, 2024, the Fifth Circuit Court of Appeals granted the government’s motion to stay enforcement of the preliminary injunction that temporarily blocked the CTA and its beneficial ownership reporting rule. As a result, reporting companies not otherwise exempt from the CTA must file their beneficial ownership information reports, with FinCEN extending the deadline for most companies to January 13, 2025.

FinCEN outlines the extended reporting deadlines in its latest alert, summarized below:

  • Reporting companies created or registered prior to January 1, 2024: Deadline extended to January 13, 2025.
  • Reporting companies created or registered in the U.S. on or after September 4, 2024, with a filing deadline between December 3, 2024, and December 23, 2024: Deadline extended to January 13, 2025.
  • Reporting companies created or registered in the U.S. on or after December 3, 2024, and on or before December 23, 2024: Additional 21 days from their original filing deadline.
  • Reporting companies that qualify for disaster relief: Extended deadlines may fall beyond January 13, 2025.
  • Reporting companies created or registered in the U.S. on or after January 1, 2025: 30 days to file after receiving actual or public notice that their creation or registration is effective.
  • Additionally, certain parties, such as plaintiffs in the National Small Business United v Yellen case, remain exempt from filing at this time.

As highlighted in FinCEN’s most recent alert:

“The government continues to believe—consistent with the conclusions of the U.S. District Courts for the Eastern District of Virginia and the District of Oregon—that the CTA is constitutional. For that reason, the Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024 and separately sought of stay of the injunction pending that appeal with the district court and the U.S. Court of Appeals for the Fifth Circuit.”

It is important to note that there are other courts considering whether the CTA is constitutional. Therefore, the legal landscape on the CTA could quickly shift again, either from the Fifth Circuit, Supreme Court, or another federal court. We urge you to consult with counsel on how to proceed, particularly if beneficial ownership reports may need to be filed for one or more entities.

As the legal saga continues to unfold, Bridgeford Trust Company will keep you updated. Visit our CTA Resource Page for timely updates, and if you have any questions, feel free to reach out via our contact form or by calling us at (605) 224-9189.

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CTA Update: FinCEN’s Statement and Bridgeford’s Resource Page

CTA FinCEN Update

CTA FinCEN UpdateAs we shared in an update last week, a federal district court issued a preliminary injunction temporarily blocking enforcement of the Corporate Transparency Act (CTA) and its reporting rule. This nationwide ruling halts the requirement for reporting companies to disclose beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). As a result, companies subject to the CTA’s reporting requirements are now exempt from filing beneficial ownership reports until further notice.

In response, FinCEN has stated:

“In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”

On December 5, 2024, the Department of Justice filed a Notice of Appeal on behalf of the Department of the Treasury, signaling the government’s intent to challenge the court’s decision. This legal action underscores the continued debate over the CTA, which was enacted to combat illicit financial activities but has faced challenges over its implications for confidentiality and compliance burdens.

Bridgeford Trust Company’s CTA Resource Page

The ongoing legal developments surrounding the CTA highlight the complexities of this legislation and its implications for businesses. To help advisors and clients stay informed, Bridgeford Trust Company has created a dedicated CTA Resource Page, offering timely updates and insights.

The landscape surrounding the CTA is evolving rapidly, and Bridgeford Trust Company will continue to monitor developments closely. We encourage you to explore the resources on our CTA Resource Page, and if you have any questions, feel free to reach out via our contact form or by calling us at (605) 224-9189.

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Federal Court Blocks Enforcement of CTA: Implications and Insights

cta-federal-court-ruling

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction temporarily blocking enforcement of the Corporate Transparency Act (CTA) and its reporting rule (Reporting Rule). This ruling halts the requirement for reporting companies to disclose beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), despite the looming January 1, 2025, compliance deadline for reporting companies formed prior to 2024. The injunction applies nationwide, meaning that all companies subject to the CTA’s reporting requirements are now exempt from filing beneficial ownership reports until further notice.

In its order, the Court noted:

“…the CTA is a law enforcement tool—not an instrument calibrated to protect commerce; an exercise of police power, rather than a regulation of an activity which might impair commerce among the several states. This the Commerce Clause will not tolerate.”

This statement underscores the Court’s view that the CTA oversteps constitutional limits, and while this ruling temporarily pauses compliance obligations, the final impact remains uncertain. Businesses should stay informed and proactive as the legal battle over the CTA unfolds, particularly in light of harsh penalties for non-compliance. Reporting companies should also carefully follow legal advice and continue gathering the required information. If legal advice is to suspend reporting in light of the Court’s ruling, reporting companies should still be prepared to file, at a moment’s notice, to meet the January 1, 2025, deadline if enforcement resumes after further Court action.

The CTA Defined and Debated: Insights from Bridgeford

At the South Dakota Trust Association’s 8th Annual Fall Forum in October, David Warren, Co-Founder and Chairman of Bridgeford Trust Company, delivered a presentation titled The Corporate Transparency Act is Here: Now What? Held in Deadwood, South Dakota, the event brought together trust industry leaders to examine the latest developments in legislation, trends, and compliance requirements.

David’s session explored the CTA, its sweeping reporting requirements for corporations, LLCs, and other entities, and the debate it has sparked due to its impact on privacy and administrative complexity. In his presentation, David outlined several critical aspects of the CTA:

  • Reporting Requirements, Exemptions, and Penalties: Entities must disclose beneficial ownership information to FinCEN, with harsh penalties for non-compliance, including fines and imprisonment.
  • Privacy Protections: While the CTA mandates extensive transparency, it includes privacy safeguards enforced by FinCEN to protect beneficial owners’ personal information.
  • Privacy in a Transparent World: The CTA’s impact on trust and estate planning, and how individuals and entities might need to restructure their trusts and holding companies to maintain privacy and asset protection.

Even as the CTA faces legal uncertainties, it challenges traditional notions of confidentiality, making it critical to understand and prepare for its potential implications. During the presentation, David emphasizes the need for proactive compliance and innovative strategies to adapt to this new transparency regime, highlighting how South Dakota’s trust laws, including Directed Trusts and robust privacy provisions, provide effective solutions to these challenges.

Watch the Full Presentation

If you missed the Fall Forum or want to explore the CTA’s implications in more detail, you can now watch David’s full presentation on Bridgeford’s YouTube Channel.



We will continue to follow the rollout of the CTA and its evolving challenges. To help advisors and clients stay informed, Bridgeford Trust Company has created a dedicated CTA Resource Page, offering timely updates and insights.

If you have questions about the CTA, its impact on trust planning, or compliance strategies, we encourage you to contact us via our contact page or by calling (605) 224-9189.

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Federal Court Rules Corporate Transparency Act Unconstitutional

Corporate-Transparency-Act-CTA-RulingThe Corporate Transparency Act (CTA), created and implemented by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), became effective January 1, 2024. The CTA aims to enhance corporate transparency in an effort to prevent and combat illicit financial activities, such as money laundering and tax evasion, discouraging the use of shell corporations as a tool to disguise and move illicit funds. The CTA implements reporting requirements for limited liability companies (LLCs), corporations, and other business entities that have never had to report such information previously, with harsh penalties for non-compliance.

From inception, the CTA sparked debate and controversy across the country, as evidenced by the hundreds of conflicting comments submitted during the preliminary drafting and review phase among business owners, lawyers, CPAs, and other professional groups, many claiming the CTA was too invasive, unmanageable, difficult to enforce, and, ultimately, ineffectual.

In National Small Business United v. Janet Yellen, a Northern District of Alabama Federal Judge ruled on March 1, 2024, that the CTA was unconstitutional. Citing privacy concerns, and a myriad of legal reasoning and precedent around the scope of Congress’s power, the Court concluded:

“The CTA exceeds the Constitution’s limits on the legislative branch and lacks a sufficient nexus to any enumerated power to be a necessary or proper means of achieving Congress’ policy goals…the Corporate Transparency Act is unconstitutional because it cannot be justified as an exercise of Congress’ enumerated powers.”

The decision – already the subject of debate and differing interpretations as to its practical impact on the CTA – has created uncertainty around its legitimacy and enforceability. The ruling is certain to be addressed by appeals courts in the coming months. While the exact implications for continued compliance with this mandatory reporting regime for those not party to the litigation is currently unclear, it would certainly seem prudent and advisable to consult with legal counsel and continue to gather required information and properly file pursuant to CTA requirements, while awaiting guidance from the Appeals Court and the Treasury, particularly for entities formed in 2024, which have 90 days to comply with the CTA.

For a more detailed discussion about the CTA, its requirements, and penalties for non-compliance, click here. You can also view a presentation about the CTA, as part of Bridgeford’s widely viewed and well received livestream, “Preserving Privacy and Asset Protection in a Transparent World”.

As we continue to see this ruling unfold, we will keep you updated on the latest details and analysis through our dedicated CTA Resource Page. Should you have any questions in the meantime on the CTA or need further assistance, please reach out to us via our contact page or by calling (605) 224-9189.

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Podcast Episode 37 – Corporate Transparency Act Reporting and a “Single Source of Truth” with Mike Montali

bridgeford-podcast

corporate-transparency-act-podcastEpisode 37 is now available on Bridgeford Trust Company’s Delivering Direction and Control podcast series! In this episode, David Warren – Co-Founder and Chairman of Bridgeford Trust Company – sits down with guest, Mike Montali – CEO of Harbor Compliance. Listeners will discover the fascinating journey of Harbor Compliance, from inception to their exponential growth in becoming a leading provider of compliance solutions for businesses and nonprofit organizations. Their purpose-built software platform and managed services are designed to streamline the complex landscape of multistate government licensing compliance, allowing businesses and organizations to effortlessly put compliance on autopilot, ensuring seamless operations and peace of mind.

As they continue their conversation, David and Mike take a focused turn towards the Corporate Transparency Act (CTA) and its implications. We learn how Harbor Compliance’s cutting-edge technology securely handles the requirements of the CTA, from information collection to storage and filing, providing a “single source of truth” for those who are affected by the new reporting requirements with absolute minimal disruption to their business.

You can listen to our latest episode on Bridgeford’s podcast page, Apple Podcasts, Google Podcasts, iHeartRadio, Spotify, and SoundCloud.



Bridgeford Trust Company’s Delivering Direction and Control podcast was developed to educate, challenge, and inspire listeners. As we interview experts in the trust planning arena, we keep listeners updated on developments regarding modern trust law and provide practical discussion on the powerful trust planning opportunities available to advisors around the country and the world – all in an effort to deliver far more direction and control to clients and their advisors than ever before. Check out all of our episodes here: bridgefordtrust.com/podcasts.

If you have questions on any of the topics discussed in this latest episode, don’t hesitate to reach out to us via our contact form or call us at (605) 224-9189.

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The Corporate Transparency Act: Increasing Transparency in Corporate Ownership

corporate-transparency-act-cta

corporate-transparency-act-ctaThe Corporate Transparency Act (CTA) is a new law coming into effect January 1, 2024, that was signed into law as part of the National Defense Authorization Act for Fiscal Year 2021, and tasked the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) with implementation through regulations. The CTA aims to enhance corporate transparency in an effort to prevent and combat illicit financial activities, such as money laundering and tax evasion, discouraging the use of shell corporations as a tool to disguise and move illicit funds.

The CTA implements reporting requirements for limited liability companies (LLCs), corporations, and other business entities that have never had to report such information previously. While the CTA primarily targets businesses’ legal and financial obligations, it is important for our readers to understand the reporting changes and requirements to ensure compliance as well as to recognize how the CTA could affect trust and estate planning.

Reporting Requirements:

Under the CTA, certain covered entities are required to report beneficial ownership information to FinCEN. The CTA applies only to certain domestic companies and foreign entities that are registered to do business in the U.S, termed as Reporting Companies. A Reporting Company is defined as a corporation, limited liability company, or other similar entity that is:

  • Created by the filing of a document with a secretary of state or similar office under the law of a U.S. state or Indian Tribe, or
  • Formed under the law of a foreign country and registered to do business in the U.S. by the filing of a document with a secretary of state or a similar office under the laws of a U.S. state or Indian Tribe.

Beneficial Owners:

A Beneficial Owner is an individual who directly or indirectly – through any contract, arrangement, understanding, relationship, or otherwise:

  • Exercises substantial control* over the entity, or
  • Owns or controls 25% or more of the ownership interests of a covered entity.

* Substantial control is defined as: serving as a senior officer of the reporting company; having authority over the appointment or removal of any senior officer or a majority of the board of directors (or similar body); or directing, determining, or having substantial influence over important decisions made by the reporting company.

What is Reported?

In general, the CTA requires a reporting company to disclose specific information regarding (1) the company itself, (2) its beneficial owners, and (3) the company applicants to FinCEN, including:

  • Full legal name
  • Date of birth
  • Current address
  • Unique identifying number and the issuing jurisdiction
  • If an individual has obtained a FinCEN identifier and provided that FinCEN identifier to a reporting company, the reporting company may include the FinCEN identifier in its report in lieu of the information required for that individual.

Exemptions:

Some entities are exempt from reporting including publicly traded companies, certain financial institutions, and entities with a physical presence and substantial operations in the United States.

  • Financial institutions or certain issuers of securities in heavily regulated industries (e.g., banks, credit unions, broker-dealers, money services businesses registered with FinCEN, and issuers registered with the U.S. Securities and Exchange Commission).
  • “Large operating companies” (defined in the final rule as an entity that employs more than 20 full-time employees in the U.S., has an operating presence at a physical office within the U.S., and filed a federal income tax or information return in the U.S. for the previous year demonstrating more than $5,000,000 in gross receipts or sales).
  • Legal entities, including certain trusts, will be excluded to the extent that they are not created by the filing of a document with a secretary of state or similar office.

Penalties for Non-Compliance:

The CTA establishes penalties for non-compliance, including civil and criminal penalties. Failure to report accurate and timely information can result in fines and even imprisonment.

  • Any person who provides false information, or fails to report complete or updated information, is subject to a civil penalty of not more than $500 for each day that the violation continues, and may face fines not more than $10,000, imprisonment for not more than two years, or both.
  • Separate from the CTA, persons could face criminal liability under the federal criminal code, which prohibits knowingly and willfully providing false information or concealing a material fact to any of the three branches of the federal government.

Privacy Protections:

The CTA includes provisions to protect the privacy of beneficial owners’ personal information. Access to this information is limited to authorized government agencies for law enforcement and national security purposes.

  • The CTA mandates that such information will be available only to authorized government authorities, subject to effective safeguards and controls.
  • The U.S. Department of the Treasury will maintain the information in a secure, nonpublic database. Importantly, however, the collected information may also be available to financial institutions so that they can confirm beneficial ownership information provided by their customers.

While trust companies themselves are not directly impacted by the CTA, clients who use trusts as part of their holding company structure may be affected. This increased transparency may influence how individuals and entities structure their trusts and holding companies for privacy and asset protection purposes.

To stay informed about the latest developments, explore our dedicated CTA Resource Page, offering timely updates and insights. For more information on the CTA and its implications for trust and estate planning, please contact us via our contact page or by calling (605) 224-9189.

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