Regulatory changes often feel like a moving target, and FinCEN’s Beneficial Ownership Rule is no exception. One moment, companies are preparing to file reports; the next, a Texas court challenge throws everything into question. If you’re wondering whether to take action or hit pause, you’re not alone. The answer, like most things in business law, depends on balancing risk, cost, and foresight.
The Corporate Transparency Act and FinCEN’s Reporting Rule
At its core, the Corporate Transparency Act (CTA) is about transparency—at least from the government’s perspective. The law, passed in 2021, requires many businesses to disclose who really owns or controls them. The idea is to cut down on money laundering and financial crimes by eliminating anonymous shell companies.
FinCEN, the agency tasked with enforcing this, rolled out its Beneficial Ownership Rule, which took effect January 1, 2024. The rule applies to most small corporations and LLCs, requiring them to file reports identifying individuals who own at least 25% or exert significant control.
For businesses created on or after January 1, 2024, the deadline to file is within 30 days of formation. Older businesses have until January 1, 2025. The reports must include full names, addresses, dates of birth, and ID numbers—plus an image of an official identification document.
The Texas Lawsuit: What Just Changed?
Just when businesses were gearing up to comply, a Texas lawsuit shook things up. A group of business owners challenged the law, arguing that it places an unfair burden on small businesses, raises privacy concerns, and possibly exceeds federal authority.
So, what does this mean?
- The CTA is still in effect. No court has issued a broad ruling invalidating the law nationwide.
- But legal challenges could change things. The lawsuit might lead to delays, modifications, or even the law being struck down in some capacity.
- Uncertainty is the real issue. Some businesses are unsure whether to comply now or wait to see if the rules change.
For now, the deadlines stand. But courts could intervene at any time, leaving businesses in limbo.
What Should Businesses Do Right Now?
1. Compliance is still required—for now
Unless a court blocks the rule, companies are expected to file on time. Those who ignore the requirement risk penalties, which could include fines and legal headaches.
2. Enforcement might be flexible
FinCEN has enforcement power, but how aggressively it will pursue non-compliant businesses right away is unclear. If courts delay the rule, enforcement could ease up—or shift entirely.
3. A smart approach: prepare but wait (if possible)
The best strategy? Gather your information now, but don’t rush to file unless you have to. If your business was created in 2024, you’re out of time—so act accordingly. Older businesses can afford to monitor developments before filing.
Should You Wait and See?
Delays and legal challenges make it tempting to wait. But there’s risk in that approach:
- If the law stands, late filers could face penalties.
- If the law gets struck down, early filers may have done unnecessary work.
The middle ground is preparing now while staying flexible. Have your beneficial ownership details ready, but keep an eye on court rulings. If a judge issues an injunction, you’ll have saved yourself some time and effort. If not, you’re prepared to comply. Regulatory uncertainty isn’t new, but this particular issue has real consequences for businesses. Working with an attorney who tracks these developments can help you avoid wasted effort—or worse, fines for missing deadlines. At Sapiens Law, we cut through the confusion so you can focus on running your business. Reach out if you need a clear, no-nonsense strategy.
