Following a district court ruling last week that placed a preliminary injunction on enforcement of the Corporate Transparency Act (CTA) and its requirement for filing beneficial ownership information (BOI) reports, the Financial Crimes Enforcement Network (FinCEN) issued an alert:
“In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
On December 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.), a federal district court in the Eastern District of Texas, ruled that the CTA is “likely unconstitutional,” and issued a preliminary order that temporarily suspends the requirements for millions of businesses across the country.
The government continues to believe that the CTA is constitutional, and the Department of Justice (DOJ) filed a Notice of Appeal on December 5, 2024, on behalf of the Department of the Treasury. The federal courts have not yet ruled on the issue of unconstitutionality of the CTA, and there is some question as to whether the District Court exceeded its authority in issuing a nationwide injunction in this case. We will continue to monitor developments related to the BOI filing requirements.
The CTA, which was passed in early 2021, requires certain reporting entities to file information about their beneficial owners (i.e., the individuals who ultimately own or control the company) through an electronic filing system. Prior to this ruling, the deadline for this filing for many businesses was January 1, 2025. (see previous post) However, due to this temporary order, companies may wait to take further action until further decisions are issued.
If you have any questions, please reach out to your GYF executive at 412-338-9300.
Resources:
FinCEN BOI Informational Brochure
FinCEN BOI Informational Videos
Small Entity Compliance Guide for BOI Reporting Requirements
Related Posts:
FinCEN BOI Filing Deadline is Rapidly Approaching
Federal CTA – Beneficial Ownership Reporting – Updates to FAQs
