Groundhog day anyone?
While the Supreme Court recently granted a stay against one injunction, a separate nationwide pause remains in effect, creating a nuanced compliance environment that demands careful navigation.
The Treasury Department's Financial Crimes Enforcement Network (FinCEN) designed the Corporate Transparency Act (CTA) to combat illicit financial activities through mandatory beneficial ownership information (BOI) reporting. However, ongoing legal challenges in multiple jurisdictions have created a temporary enforcement pause that has flip-flopped back and forth for weeks.
Current Status and Implications
The Supreme Court's January 23, 2025, decision to lift the preliminary injunction against the Corporate Transparency Act (CTA) marks a significant shift in beneficial ownership reporting requirements. This development demands immediate attention from small business owners.
The CTA's Beneficial Ownership Information (BOI) reporting requirements are now reinstated following the Supreme Court's intervention in Texas Top Cop Shop, Inc., et al. v. Garland, et al. While constitutional challenges continue in lower courts, the reporting obligations are currently enforceable, affecting an estimated 32 million small businesses.
Given the fluid situation, practitioners should maintain detailed documentation of all client communications and compliance efforts. This includes tracking client notifications, maintaining records of filing preparations, and documenting any compliance decisions made during this transition period.
Notably however, tax practitioners should carefully consider whether professional liability coverage extends to BOI reporting or if referring clients to contact their attorneys is a best next step.
While monitoring legal developments, practitioners should focus on implementing robust compliance processes. This includes gathering beneficial ownership information, establishing reporting procedures, and maintaining detailed compliance documentation. Even if not assisting clients with submissions, practitioners typically retain all the needed information for the reporting and are a valuable resource to small business clients.
The situation requires balancing immediate compliance obligations with awareness that further changes may occur through legal or legislative channels. Practitioners should maintain flexibility while ensuring current compliance with reinstated requirements.
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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