Recent Developments

By: Sarah Delano Pavlik

Here are a few things happening in the legal world.

Corporate Transparency Act.  The Corporate Transparency Act was enacted in 2021 with the stated purpose of helping to combat money laundering, terrorist financing, corruption, and tax fraud.  The original effective date was January 1, 2023.  The Act required "small" business entities to disclose information about their beneficial owners.  The effective date was continually postponed, with the latest effective date of March 21, 2025.  The Act was also challenged in several lawsuits.  Failure to comply with the reporting requirements could result in penalties ranging from $25,000 to approximately $250,000 and also criminal liability.

On March 2, 2025, the Treasury Department issued the following statement:

    The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either. The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.

Therefore, the law remains in effect, but there will be no penalties for failure to report for American entities.  Since the Act has not been repealed, a future administration could choose to reinstate the penalties.

Even though the U.S. Treasury will not be enforcing the CTA, other jurisdictions have similar requirements.  For example, New York and Pennsylvania have their own reporting requirements.

New Illinois Sales Tax.  Per the Illinois Department of Revenue website, "Effective January 1, 2025, if you lease or rent tangible personal property in the ordinary course of your business, you are considered a retailer subject to Illinois’ Sales and Use Tax laws, and you must register with the Illinois Department of Revenue and pay tax on your lease or rental receipts."  "'Tangible personal property' exists physically (i.e., you can touch it) and can be used or consumed. Clothing, jewelry, and business equipment are examples of tangible personal property." The law does not apply to the rental of cars, trucks, or boats. It also does not apply to rentals in Chicago, as Chicago already imposes a tax on these transactions.  If you rent your copier, office furniture, or other equipment, you will now be paying sales tax on the rental.  You will also be seeing tax on personal items such as golf cart rentals.

AI.  The law regarding AI is just starting to develop.  A recent case in the District of Columbia Circuit Court held that copyright law requires a human author.  A computer scientist had applied for a copyright and listed an AI platform as the author.  The copyright office denied the copyright, and the court affirmed.

Beneficiary Designation Reminder.  At least annually, you should review your beneficiary designations on retirement plans, life insurance, and any other assets with beneficiaries.  The beneficiary designation can control over a will, trust agreement, or divorce decree.  A recent Illinois Fourth Circuit opinion awarded a deceased man's retirement account to his ex-wife even though the account was awarded to him in the divorce because he never changed the beneficiary designation.  These cases can be fact specific, but the best practice is to change your beneficiary designations and avoid being a test case.

FTC Ban on Non-Competes.  Last spring, the Federal Trade Commission adopted a final rule that would have banned nearly all employment non-competes.  Last summer, a Federal District Court in Texas issued a national stay barring enforcement of the rule, finding that the FTC had exceeded its authority and that it had acted in an arbitrary and capricious manner. The FTC then appealed that ruling.  However, the Trump administration recently filed motions with the appellate court to stay (“pause”) the appeals while the FTC reconsiders whether it will defend the rule in the future.

This article is for informational and educational purposes only and does not constitute legal advice.