Corporate Transparency Act (CTA) financial disclosure requirements were delayed indefinitely again by the U.S. Court of Appeals for the Fifth Circuit on Thursday.
The court's latest decision reinstates the nationwide injunction, blocking the burdensome beneficial ownership information (BOI) reporting requirements for small businesses in Alabama and across the country while the court fully considers the government's appeal.
It also nullifies a previous Fifth Circuit order that allowed the government to begin enforcing the CTA and BOI reporting requirements again with a deadline to comply by January 13.
Vincent Schilleci III, a tax attorney with Maynard Nexsen in Birmingham, told 1819 News on Friday, "While this appears to be a win for small businesses in the short term, the back-and-forth uncertainty as to whether or not to file will continue to cost small businesses time and money until we get a final answer from the US Supreme Court or Congress."
"Even though the nationwide injunction prohibiting enforcement of the Corporate Transparency Act is back in force, small businesses should still be prepared to file if there are further developments changing the status of the nationwide injunction," he added.
The CTA was part of the National Defense Authorization (NDAA) for fiscal year 2021, passed on January 1, 2021, and went into effect on January 1, 2024.
The law doesn't apply to any entity that employs more than 20 full-time employees, has filed a federal income tax return reporting gross receipts exceeding $5 million, and has an operating presence in the United States.
Most of the burden to disclose ownership information to the federal government would've fallen on smaller businesses with fewer than 20 full-time employees and $5 million in sales. A list of other narrow exemptions can be found here.
"The court's reinstatement of the nationwide injunction is a welcome sigh of relief for small businesses," said Rob Smith, senior attorney for the National Federation of Small Business's Legal Center. "Since being told earlier this week that they must urgently submit their BOI reports, our nation's small businesses have experienced enormous chaos and confusion. Thankfully, the court's latest decision recognizes that the CTA and BOI reporting requirements pose serious constitutional questions. It also provides Main Streets across the country with a reprieve from this harmful mandate while our lawsuit proceeds."
To connect with the author of this story or to comment, email caleb.taylor@1819News.com.
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