Despite Court Ruling, NBAA Recommends LLCs Continue to Prep CTA Reports

Dec. 9, 2024

Although a federal court has put a hold on requirements under the Corporate Transparency Act (CTA) for certain companies to report specific owner information – including ownership of business aircraft – by Jan. 1, 2025, experts encourage those impacted by the CTA to continue readying for reporting requirements.

The U.S. Court for the Eastern District of Texas has determined that reporting requirements under the Corporate Transparency Act (CTA) may be unconstitutional, issuing a preliminary injunction enjoining enforcement of the rule nationwide. The Dec. 3 preliminary injunction temporarily stays a compliance deadline of Jan. 1, 2025. Effectively, this means entities affected by the CTA need not comply with the Jan. 1 reporting deadline while the injunction is in effect.

The CTA authorized the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) to request limited liability companies (LLC) and other entities to report “ultimate beneficial-owner information,” including name, date of birth, current address and more. This would apply to entities that own business aircraft in an LLC, a common structure to establish leases under which companies may share aircraft and for a host of other business and tax reasons. Under the CTA, millions of entities formed prior to Jan. 1, 2024, had until Jan. 1, 2025, to file.

Jonathan Epstein, partner at Holland & Knight LLP, says that despite the federal court’s action, entities impacted by the CTA are strongly advised to continue preparing for the reporting requirement.

“Don’t stop preparing for this report,” Epstein said. “Be ready to file because we don’t know what’s going to happen in a higher court,” adding that, for some companies, the reporting requirement is quite simple, but others will need time to gather data to make the report.

FinCEN has indicated that the filing of Beneficial Ownership Information is voluntary until further notice. Reporting companies will not be subject to liability if they fail to file while the preliminary injunction remains in effect, according to FinCEN.

Epstein said it’s unlikely a court action changing the status of the injunction will occur before the Jan. 1 deadline, so for now, reporting entities are not required to file a report. Should a higher court reverse this decision, it is likely the stay would be lifted with a future effective date, allowing impacted entities to report before a new compliance date.

NBAA will continue to monitor the situation and provide updates as available.