A year extension to the filing deadline for the Corporate Transparency Act (CTA) is buried in the text of a congressional continuing resolution to fund the government proposed by the U.S. House of Representatives.

An injunction, issued by the U.S. District Court for the Eastern District of Texas earlier this month, already halts the Jan. 1 deadline required by the CTA. Had the deadline remained, businesses that missed it would’ve faced up to two years imprisonment, fines up to $10,000, and civil penalties up to $591 per day. 

However, the U.S. Department of Justice appealed the preliminary injunction to the U.S. Court of Appeals for the Fifth Circuit. If the injunction were overturned with an appeal, businesses could face a possible limited reporting timeframe. 

The spending bill could give some relief to business owners if passed by Congress. Language on page 223 in Section 122 gives an extension of the filing deadline for any pre-existing reporting companies. 

“United States Code is amended by striking ‘before the effective date of the regulations prescribed under this subsection shall, in a timely manner, and not later than 2 years after the effective date of the regulations prescribed under this subsection,’ and inserting ‘before January 1, 2024, shall, not later than January 1, 2026,'” according to the bill text. 

More than a 100 associations that support small business sent a letter to Congress Wednesday praising the language found in the resolution.

“This provision would provide much-needed relief to the Main Street business community, enable federal regulators to continue their education and outreach efforts, and allow various legal challenges to make their way through the courts,” the letter says. “The CTA mandates that companies disclose and regularly update detailed beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). It subjects covered entities and their “beneficial owners” to vague and complex reporting requirements while putting their sensitive personal information at risk.”

The letter notes that FinCEN estimates more than 32 million entities will be affected by the new law this year. At the same time, FinCEN reports it has receiced less than 30% of required filings.

Organizations that signed the letter include Society of Collision Repair Specialists (SCRS), S Corporation Assocation, National Federation of Independent Buisness and the National Small Business Assocation (NSBA).

NSBA also issued a press release saying all new businesses will still need to file Beneficial Ownership Information (BOI) within 90 days of the company’s creation. 

Yet, NSBA celebrated the congressional resolution calling it a “Hail Mary” that will give small businesses some certainty this year.

“NSBA has been leading the charge against the CTA for years,” NSBA President and CEO Todd McCracken said in a press release. “There is widespread confusion and massive concern among America’s smallest businesses about the BOI reports, and by including this delay it provides much-needed predictability for small businesses.” 

McCracken said he will continue to speak with Congress about getting the provision included in the overall spending package. He said the organization will continue to fight the CTA through its lawsuit awaiting judgment from the Eleventh Circuit Court of Appeals. 

The suit awaits judgment after the feds filed an appeal to a March decision by the Alabama U.S. District Court, which ruled that the CTA is unconstitutional. 

There have been multiple attempts to stall the CTA by different groups since it was enacted in 2021. 

Hundreds of small businesses, including the Society of Collision Repair Specialists (SCRS), National Small Business Association, and S Corporation Association, asked for the passage of different bills, such as S3625 and its companion HR5119, that would have stalled legislation; however, none of the bills have made it through Congress.

One letter sent to Congress in March says the CTA specifically burdens the smallest of businesses with reporting requirements by applying only to entities with 20 or fewer employees, or less than $5 million in revenue. 

Most recently, more than 40 members of Congress sent a letter to FinCEN requesting a one-year delay on the CTA. 

An email from the S Corporation Association said organizations need to continue to work together with Congress and the new administration on a permanent fix.

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