CTA Reporting Revisited: This Unexpected Change Affects You

The Corporate Transparency Act (CTA) has been at the center of recent court battles. These legal developments have left small businesses, including many in the trucking industry, uncertain about their obligations. The CTA aims to combat financial crimes by requiring businesses to report information about their owners. However, court rulings have delayed enforcement of CTA reporting and created confusion about compliance deadlines.

Key Legal Developments in 2024

Jan. 1, 2024: CTA Becomes Effective

The CTA officially took effect at the start of 2024. Businesses formed before Jan. 1, 2024, were initially required to report by Jan. 1, 2025. Newly created businesses were given 90 days to comply. Starting in 2025, companies will have 30 days to file after formation.

March 1, 2024: Alabama Court Rules CTA Unconstitutional

An Alabama district court ruled in National Small Business Association v. Yellen that the CTA was unconstitutional. However, the ruling applied only to the plaintiffs in that case. Most businesses were still required to comply.

Dec. 3, 2024: Texas Court Issues Nationwide Injunction

A Texas district court declared the CTA likely unconstitutional in Texas Top Cop Shop Inc. v. Garland. The court issued a nationwide injunction that temporarily blocked enforcement of the law.

Dec. 23, 2024: Fifth Circuit Reinstates Reporting Requirements

The Fifth Circuit Court of Appeals stayed the Texas court’s injunction on Dec. 23. This reinstated the CTA’s reporting requirements. On the same day, FinCEN extended the filing deadline from Jan. 1, 2025, to Jan. 13, 2025.

Dec. 26, 2024: Fifth Circuit Vacates Stay Order

Three days later, a different Fifth Circuit panel reversed the Dec. 23 ruling. The nationwide injunction was reinstated, halting the CTA’s enforcement again.

What CTA Reporting Requires

The CTA requires businesses to file reports with the Financial Crimes Enforcement Network (FinCEN). These reports must include personal information about company owners. Required details include full names, addresses, birthdates, and identification numbers. Non-compliance could result in significant fines or even jail time.

The trucking industry is particularly affected by the CTA. Most trucking companies are small businesses or owner-operators. The cost of compliance could range from $85 to over $2,600 per company. Many truckers are also concerned about privacy and security risks from sharing personal details.

Updated Deadlines and Extensions for CTA Reporting

FinCEN has adjusted deadlines due to recent legal developments:

• For businesses formed before 2024: The deadline is now Jan. 13, 2025.
• For businesses formed between Dec. 3 and Dec. 23, 2024: These businesses have 21 additional days beyond their original deadlines.
• For businesses formed after Jan. 1, 2025: These companies have 30 days to file their reports.

Businesses in disaster-affected areas may qualify for extended deadlines beyond Jan. 13, 2025.

Impact on the Trucking Industry

The trucking industry faces several challenges related to the CTA:

• Increased Costs: Compliance costs could strain businesses with tight profit margins.
• Privacy Concerns: Many trucking companies worry about the security of their personal data.
• More Paperwork: Trucking businesses already face heavy regulatory burdens. The CTA adds another layer of complexity.

For now, trucking companies are not required to comply with the CTA. However, the future remains uncertain.

What Truckers Can Do Now

Here are steps trucking businesses can take while enforcement is on hold:

1. Stay Informed: Keep up with updates about the CTA and its legal challenges.
2. Evaluate Your Business: Determine whether your company falls under the CTA’s reporting requirements.
3. Seek Legal Advice: A lawyer or compliance expert can provide guidance on what to do if the law is enforced.
4. Support Advocacy Efforts: Industry groups are working to reduce the law’s impact on small businesses.

Looking Ahead

The CTA’s enforcement is paused for now. However, oral arguments are scheduled for March 25, 2025. Until then, FinCEN encourages businesses to voluntarily file their reports.

Trucking companies should use this time to prepare for the possibility of future enforcement. They should also remain engaged in advocacy efforts to address the challenges posed by the CTA. The legal battles are far from over, but staying informed will help trucking businesses adapt to any changes.