The Corporate Transparency Act (CTA) aims to combat illicit finance activities by requiring companies to report their beneficial ownership information. This is particularly important for small businesses and helps prevent bad actors from exploiting loopholes.
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.
