NBAA: Be Prepared for Ownership Reporting Requirements

While a U.S. district court has halted certain ownership reporting requirements under the Corporate Transparency Act (CTA), NBAA is advising members to remain prepared to comply.

Enacted in January 2021, the CTA authorized the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) to require certain limited liability companies and other organizations to furnish “ultimate beneficial-owner information” such as name, date of birth, and address. This included LLCs that own business aircraft. NBAA noted that the use of LLC is a common structure for aircraft leases. Under CTA, affected companies were required to comply by Jan. 1, 2025.

However, on December 3 the U.S. Court for the Eastern District of Texas issued a preliminary injunction against enforcement of that deadline, citing constitutional concerns. This provides a reprieve for the time being on the deadline; FinCEN has indicated that filing the information is voluntary for now.

NBAA noted that experts such as Jonathan Epstein, a partner at Holland & Knight, are advising companies to still be prepared to report. “Be ready to file because we don’t know what’s going to happen in a higher court,” Epstein told NBAA, noting that some companies will need the time to gather the appropriate data.

Separately, David Mayer, a partner in the aviation practice of Shackelford, Bowen, McKinley & Norton in Dallas, also said organizations should be alert for further litigation on the merits of the constitutional arguments against the requirements.

In a separate case earlier this year, a federal district court in Alabama had deemed the CTA unconstitutional and halted enforcement against the plaintiffs in that case (National Small Business United), according to Mayer in an AINsight blog. But since the ruling applied to the plaintiffs, it created confusion on whether others must still comply.