A recent court decision from a federal court in Texas has paused a major reporting requirement that would have affected many small businesses across the United States, including here in Arizona. On December 3, 2024, a federal judge in Texas issued an order stopping the enforcement of the Corporate Transparency Act (CTA). This means businesses are no longer required to meet the upcoming January 1, 2025, deadline for filing Beneficial Ownership Information (BOI) Reports—at least for now.
Here’s what Arizona businesses need to know about this ruling and how it could affect you:
What is the Corporate Transparency Act?
The CTA is a federal law designed to combat money laundering and fraud by requiring many small businesses to report information about their “beneficial owners” (the people who own or control the company) to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).
The law was sweeping and applied to most companies, including LLCs and corporations, unless they were otherwise exempt.
- Existing companies were required to submit this information by January 1, 2025.
- New companies formed in 2024 had 90 days to file.
- Starting January 1, 2025, newly formed companies would have needed to file within 30 days of formation.
Why Did the Court Stop the CTA?
The court ruled that the CTA likely overstepped constitutional limits and could harm businesses. The judge described the law as a “quasi-Orwellian” overreach that violated privacy and threatened federalism (the balance of power between federal and state governments).
As a result, the court issued a nationwide order stopping the federal government from enforcing the CTA for the time being.
What Does This Mean for Arizona Businesses?
For now, Arizona businesses do not need to file beneficial ownership reports with FinCEN. This pause applies to:
- Existing companies that were facing the January 1, 2025, deadline.
- New companies formed in 2024 that had a 90-day filing window.
- Companies formed in 2025 and beyond that would have faced a 30-day deadline.
If you’ve already filed your report, you don’t need to do anything else for now. If you haven’t filed, this ruling gives you more time to prepare, but you should stay informed in case the decision changes.
Will the Reporting Requirement Come Back?
This is not the final word on the CTA. The decision is almost certain to be challenged, and higher courts may reverse or modify the ruling. If that happens, reporting deadlines could return quickly.
What Should Arizona Business Owners Do Now?
- Stay updated. Keep an eye on developments in this case, as rules could change again.
- Prepare just in case. If the law is reinstated, businesses may need to file on short notice. Now is a good time to identify your company’s beneficial owners and gather any required documents. Most small businesses have few beneficial owners, but make sure you have records of their driver’s licenses, as well as the EIN for the entity.
- Get professional advice. Navigating legal changes can be tricky. If you’re unsure how this ruling affects your business, schedule a consultation with our attorneys.
We’re Here to Help
At Windrose Law Center, we help Arizona businesses navigate complex legal requirements like the Corporate Transparency Act. If you have questions about this ruling or want to ensure your business stays compliant, reach out to us for personalized guidance.
Contact us today to learn more and protect your business.