Today more than 100 trade associations joined with S-Corp in asking lawmakers to pass a Continuing Resolution bill that includes language delaying the Corporate Transparency Act’s reporting deadline. The effort was mounted following reports that some House members were seeking to strip the provision from the broader package, a move that would needlessly expose millions of law-abiding business owners and employees to stiff fines and penalties.
As the letter makes clear, a one-year delay is critical and would provide much needed relief and certainty to businesses, give federal regulators more time to execute affected entities, and allow various legal challenges to make their way through the courts:
FinCEN estimates that more than 32 million such entities will be affected by the new law just this year, with an additional 6 million each subsequent year as new businesses are formed. Yet as of December 1, 2024 – just one month before a year-end deadline – FinCEN has received less than 30 percent of the required filings, highlighting the stark education gap when it comes to the compliance obligations mandated by the CTA.
Adding to the confusion are the myriad legal challenges that have been filed throughout the country, and which stand at various stages of the legal process. Notably, a nationwide injunction against the CTA was recently appealed and will be heard by the Fifth Circuit, while an Alabama court ruling that found the CTA unconstitutional is pending appeal in the Eleventh Circuit. Small businesses therefore find themselves in a precarious position: they are currently under no obligation to file, but a single ruling could reverse that dynamic, leaving them with just days to comply with this burdensome and costly statute.
So where do things currently stand? We’ve heard from numerous offices that – thanks at least in part to outreach from our trade association allies and our collective members – the provision may be safe.
However, the broader bill is now in danger as more and more Republicans come out against it as the day progresses. As that opposition mounts, we once again urge those to reach out to their elected officials and ask them to include delay language in the final CR.