On December 3, 2024, the United States District Court for the Eastern District of Texas issued a preliminary nationwide injunction against enforcement of the CTA. On December 7, 2024, the Financial Crimes Enforcement Network (FinCEN), the federal agency charged with enforcing the CTA, issued a statement confirming that “…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 [injunction] order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
The FinCEN statement clarified that the injunction covers both (a) reporting companies in existence prior to January 1, 2024, which are required to report by January 1, 2025, and (b) reporting companies formed in 2024, which are required to report within 90 days after their legal formation.
As a result, the reporting obligations under the CTA are temporarily suspended, which may mean reporting companies no longer need to file a Beneficial Ownership Information Report (BOI) before the current January 1, 2025 deadline. However, this ruling is subject to change and the reporting obligations may be reinstated.
We recommend that reporting companies either (1) voluntarily file the BOI report now notwithstanding the injunction, or (2) at least continue to gather the requisite information for filing and to be prepared for filing in anticipation of the injunction order being overturned. If this temporary injunction is overturned or otherwise limited by an appellate court, reporting companies may still be required to file an initial BOI report no later than January 1, 2025.
RCO Law will continue to monitor further developments and court rulings from the Eastern District of Texas, the Fifth Circuit Court of Appeals, and other courts, as their rulings will dictate responsibilities for reporting companies going forward. You also may wish to review Corporate Transparency Act Guidelines that we created for our clients: Corporate Transparency Act Guidelines December 2024
Attorneys at RCO Law are prepared to assist you with CTA reporting requirements. Please contact your RCO Law attorney, or Joshua Kin, for more information.
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