Corporate Transparency Act (CTA)

***LITIGATION UPDATE***

In light of federal litigation, there is currently an active injunction on enforcing the requirements of the Corporate Transparence Act (CTA). An expedited briefing schedule has been set by the Supreme Court of Appeals of the United States. The final reply was due on January 13, 2025.

Until the Supreme Court rules, FinCEN has stated that companies are not obligated to file beneficial ownership information and will not face penalties for non-compliance. However, businesses may choose to file voluntarily.

For more information, see Litigation Background at the bottom of this webpage, or visit FinCEN.gov/BOI

Overview of the CTA:

The Corporate Transparency Act (CTA) is a federal law that was set to take effect on January 1, 2024, that applies to many West Virginia businesses. The purpose of the CTA is to prevent and identify financial crimes, such as money laundering, tax fraud, and sanctions evasion.

The CTA requires reporting companies to file specific “Beneficial Ownership Information (BOI)” through an online portal run by the United States Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). The information will not be publicly available but will be shared with law enforcement.

Though the CTA is focused on smaller businesses, most businesses will be classified as “reporting companies”. There are 23 exemptions to that classification that will not report, including “large companies”, publicly-traded companies, banks, insurance companies, tax exempt entities and political organizations. View the complete list of exemptions.

Reporting companies in existence in West Virginia before January 1, 2024 must file their initial reports before January 1, 2025. New companies created between January 1, 2024 and December 31, 2024 will have 90 days after registration to file. Reporting companies created on or after January 1, 2025 will have 30 days after registration to file. Any change to Beneficial Ownership Information must be reported within 30 days of the change (e.g. sale, merger, acquisition, or death of a member).

Below is a five-minute tutorial on how to complete a Beneficial Ownership Information filing online using FinCEN’s e-filing system.

Contact FinCEN Helpline:

• Toll Free - 1-800-767-2825
• OR 703-905-3591​

Litigation Background:

In 2021, Congress adopted the Corporate Transparency Act (31 U.S.C. 5336) to counter financial crimes. In 2022, FinCEN adopted a rule establishing deadlines by which reporting companies must submit initial reports (87 Fed. Reg. 59,498). The rule provided that entities created or registered before 2024 must comply by January 1, 2025; entities created or registered during 2024 must comply within 90 days after formation or registration; and entities created or registered after 2024 must comply within 30 days after formation or registration (31 C.F.R. 1010.380(a)(1)).

On May 5, 2024, six plaintiffs, including Texas To Cop Shop, Inc., filed this suit in the U.S. District Court for the Eastern District of Texas, claiming that the Act’s reporting requirements exceed Congress’s enumerated powers and violate the First and Fourth Amendments. On June 3, 2024, plaintiffs filed a motion for a preliminary injunction seeking to halt the implementation of the CTA’s reporting requirements and deadlines. On December 3, 2024, the district court issued a universal preliminary injunction prohibiting the enforcement of the Act’s reporting requirements and FinCEN’s corresponding reporting rule. Because plaintiff National Federation of Independent Business’s membership extends across the country, the district court concluded that the injunction should apply nationwide. The district court denied the government’s motion to stay the preliminary injunction pending appeal.

On December 9, 2024, the government appealed to the Fifth Circuit. On December 13, 2024, the government filed a motion to stay the injunction issued by the district court. On December 23, 2024, a motions panel of the Fifth Circuit granted the government’s motion to stay the preliminary injunction pending appeal. Recognizing that “reporting companies” may need additional time to comply with the Act given the period when the preliminary injunction was in effect, FinCEN extended the reporting deadlines in certain respects, including by extending the deadline for entities formed before 2024 from January 1, 2025, to January 13, 2025. Plaintiffs filed a petition for rehearing en banc. While that petition was pending, on December 26, 2024, a merits panel of the Fifth Circuit vacated the motions panel’s stay – thus reinstating the district court’s universal injunction. The merits panel issued a briefing schedule under which briefing will be completed by February 28, 2025, and scheduled oral argument for March 25, 2025. After the merits panel reinstated the district court’s injunction, plaintiffs withdrew their petition for rehearing as moot.

On December 31, 2024, the government submitted its application for a stay of the injunction to the United States Supreme Court. On January 3, 2025, Justice Alito set an expedited briefing schedule requesting a response to the application by January 10, 2025. The plaintiffs filed their response on January 10, 2025. The government filed its reply on January 13, 2025. Multiple amicus briefs have been filed.​​