Corporate Transparency Act (CTA) Update
On December 3, 2024, U.S. District Judge Amos L. Mazzant of the Eastern District of Texas issued a nationwide preliminary injunction halting the enforcement of the Corporate Transparency Act (CTA) and its associated reporting rules. The CTA, enacted in 2021, mandates that corporations, limited liability companies (LLCs), and similar entities disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) to combat financial crimes like money laundering and terrorism financing.
Judge Mazzant’s decision arose from a lawsuit filed by the National Federation of Independent Business and several small businesses, which challenged the constitutionality of the CTA. The court concluded that the CTA likely exceeds Congress’s authority, infringing upon states’ rights under the Tenth Amendment. Consequently, the injunction suspends the requirement for entities to comply with the CTA’s reporting obligations, which were set to take effect on January 1, 2025.
In response, the U.S. Treasury Department has appealed the ruling, seeking to reinstate the enforcement of the CTA. Meanwhile, FinCEN has indicated that compliance with the reporting requirements is voluntary pending further legal developments. This legal uncertainty has left many businesses unsure about their obligations under the CTA.
As the legal process unfolds, business owners are advised to stay informed about the status of the CTA and prepare for potential compliance requirements, depending on the outcomes of ongoing appeals. Waverly Advisors continues to monitor the proceedings and will send further communication as updated information is available.
This information is provided solely for general informational purposes and does not constitute legal advice. Waverly is not a law firm and does not provide legal advice.
THE INFORMATION PRESENTED IN THIS DOCUMENT IS FOR GENERAL INFORMATIONAL AND EDUCATIONAL PURPOSES AND IS NOT SPECIFIC TO ANY INDIVIDUAL’S PERSONAL CIRCUMSTANCES. NOTHING IN THIS DOCUMENT CONSTITUTES, OR SHALL BE RELIED UPON AS INVESTMENT, LEGAL, OR TAX ADVICE TO ANY PERSON. THE INFORMATION IN THIS DOCUMENT IS PROVIDED EFFECTIVE AS OF THE DATE OF ITS PUBLICATION, DOES NOT NECESSARILY REFLECT THE MOST CURRENT STATUS OR DEVELOPMENT, AND IS SUBJECT TO REVISION AT ANY TIME. INVESTING INVOLVES RISK, AND PAST PERFORMANCE DOES NOT NECESSARILY PREDICT FUTURE RESULTS. NONE OF WAVERLY, OR ANY OF ITS OFFICERS, MEMBERS OR AFFILIATES, IN ANY WAY WARRANT OR GUARANTEE THE SUCCESS OF ANY ACTION THAT ANYONE MAY TAKE IN RELIANCE ON ANY STATEMENTS OR RECOMMENDATIONS IN THIS DOCUMENT.
WAVERLY ADVISORS, LLC (“WAVERLY”) IS AN SEC-REGISTERED INVESTMENT ADVISER. A COPY OF WAVERLY’S CURRENT WRITTEN DISCLOSURE BROCHURE AND FORM CRS (CUSTOMER RELATIONSHIP SUMMARY) DISCUSSING OUR ADVISORY SERVICES AND FEES REMAINS AVAILABLE AT WAVERLY-ADVISORS.COM. YOU SHOULD NOT ASSUME THAT ANY INFORMATION PROVIDED SERVES AS THE RECEIPT OF, OR AS A SUBSTITUTE FOR, PERSONALIZED INVESTMENT ADVICE FROM WAVERLY ADVISORS, LLC (“WAVERLY”). THIS INFORMATION SHOULD BE USED AS A REFERENCE ONLY. TALK TO YOUR WAVERLY ADVISOR, OR A PROFESSIONAL ADVISOR OF YOUR CHOOSING, FOR GUIDANCE SPECIFIC TO YOUR SITUATION. PLEASE NOTE: THE SCOPE OF THE SERVICES TO BE PROVIDED DEPENDS UPON THE NEEDS OF THE CLIENT AND THE TERMS OF THE ENGAGEMENT.
INVESTMENT ADVISORY SERVICES ARE OFFERED BY WAVERLY ADVISORS, LLC, AN INVESTMENT ADVISER REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION. © 2024 WAVERLY ADVISORS, LLC. ALL RIGHTS RESERVED.