On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction in the case Texas Top Cop Shop, Inc. v. Garland, temporarily halting the enforcement of the CTA and its beneficial ownership reporting obligations. The court also suspended all related compliance deadlines.

Then, on December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit reversed the injunction, ordering that reporting companies must once again submit their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). Companies were given a new, extended deadline of January 13, 2025, to file their reports.

This development was short-lived. On December 26, 2024, the Fifth Circuit vacated its order to stay the injunction, meaning companies were no longer required to submit beneficial ownership reports while the Court continued to consider the merits of the case.

In a further reversal, on January 23, 2025, the U.S. Supreme Court intervened, issuing a stay on the injunction (24A653 McHenry v. Texas Top Cop Shop, Inc. (01/23/2025).

However, on January 7, 2025, a separate nationwide injunction was issued in the case of Smith v. United States Department of the Treasury, also pending in the Eastern District of Texas, further blocking the enforcement of the CTA’s beneficial ownership information (BOI) reporting requirements. This means that, despite the Supreme Court’s recent ruling, the BOI reporting obligations remain unenforceable for now. FinCEN has clarified on its website that “[r]eporting companies […] are not subject to liability if they fail to file [beneficial ownership] information while the Smith order remains in force.”

We continue to monitor the ongoing litigation closely. For the time being, the filing of BOI reports remains voluntary.

The post Client Alert: Corporate Transparency Act Update – BOI Filing Remains Voluntary appeared first on Weiss Serota Helfman Cole + Bierman.

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction in the case of Texas Top Cop Shop, Inc. v. Garland, temporarily halting the enforcement of the CTA and its beneficial ownership reporting requirements. The court also stayed all deadlines for compliance.

On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit issued an order staying the injunction. As a result, reporting companies were once again required to submit beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). Most companies were required to file by a new, extended deadline of January 13, 2025.

The renewed reporting requirement was short-lived, though, because in yet another turn of events, on December 26, 2024, the same appellate court vacated its stay of the injunction. Accordingly, reporting companies under the CTA are no longer required to file a BOI report while the Court debates the merits of the case. 

Given this continued uncertainty, reporting companies should make a determination as to whether to submit their BOI report voluntarily or await an appellate decision on the injunction. For those companies that decide to wait, completing the analysis to identify their beneficial owners under the CTA may facilitate filing in the event enforcement of the law is reinstated. This is an extremely fluid situation. If you decide not to file, you need to make sure that you are closely following the decisions rendered in the Texas Top Cop Shop case.

For those reporting companies that choose to file voluntarily or need assistance in determining their beneficial owners, our Firm remains ready to assist them in navigating the process and ensuring compliance with the requirements.

The post Client Alert: Key Updates on the CTA appeared first on Weiss Serota Helfman Cole + Bierman.

In response, FinCEN issued guidance stating that, while the injunction is in effect, businesses are not required to file their beneficial ownership information. The court also stayed all deadlines for compliance. However, FinCEN also clarified that companies may still voluntarily submit their reports during this time. This guidance ensures businesses are clear on their obligations during the ongoing litigation.

The Department of Justice filed a Notice of Appeal on December 5, 2024, challenging the injunction. While several district courts have upheld the CTA’s constitutionality, including those in Virginia and Oregon, FinCEN will comply with the injunction as long as it remains in effect. Therefore, businesses are not required to submit beneficial ownership reports and will not face penalties for non-compliance during this time, though they may still voluntarily submit the reports.

Given this uncertainty, reporting companies should make a determination as to whether to submit their BOI report voluntarily or await an appellate decision on the injunction. For those companies that decide to wait, completing the analysis to identify their beneficial owners under the CTA may facilitate filing in the event enforcement of the law is reinstated. 

For those reporting companies that choose to file voluntarily or need assistance in determining their beneficial owners, our Firm remains ready to assist them in navigating the process and ensuring compliance with the requirements.

The post Client Alert: Corporate Transparency Act Litigation Update appeared first on Weiss Serota Helfman Cole + Bierman.