Jan. 29, 2025
The Supreme Court of the United States has overturned a federal court’s decision that reporting requirements in the Corporate Transparency Act (CTA) may be unconstitutional. In December, the federal court issued a preliminary injunction enjoining enforcement of the rule nationwide in Texas Top Cop Shop v. Garland, temporarily staying the compliance deadline of Jan. 1, 2025.
The CTA requires certain limited liability companies (LLCs) and other entities to report “ultimate beneficial-owner information,” including name, date of birth, current address and more, to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). This would apply to many 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.
However, the Supreme Court’s decision does not settle the matter. A judge in a different case, Smith v. U.S. Department of the Treasury, has also issued a nationwide injunction and that decision has not yet been appealed.
Following the Jan. 23 Supreme Court ruling, FinCEN posted an update stating, “As a separate nationwide order issued by a different federal judge in Texas (Smith v. U.S. Department of the Treasury) still remains in place, reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force.”
However, FinCEN notes, reporting companies may continue to voluntarily submit Beneficial Ownership Information Reports.
Legislation to repeal the CTA was re-introduced to Congress last week. NBAA will monitor the situation and provide updates as available.