In a recent legal development, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction on December 3, 2024, temporarily halting enforcement of the Corporate Transparency Act (CTA) and its beneficial ownership information (BOI) reporting requirements. This case (Texas Top Cop Shop, Inc. v. Garland) challenges the constitutionality of the CTA’s reliance on the Commerce Clause for mandatory BOI disclosure.
What This Means for Businesses
Current Filing Status:
While the CTA remains in effect, the Financial Crimes Enforcement Network (FinCEN) will comply with the court’s order for as long as it remains in effect. Reporting companies are not currently required to file their beneficial ownership information and will not be subject to liability for failing to do so while the preliminary injunction remains in place. However, the obligation to file has already accrued, and further developments may reinstate deadlines.
Options to Consider:
- Businesses Near Completion: Filing now may help minimize future administrative challenges if the injunction is lifted without a grace period.
- Businesses Taking a Wait-and-See Approach: Entities may prefer to delay filing while awaiting further legal or regulatory clarity, depending on the complexity of their filings and available resources.
Legal Landscape:
This is a preliminary ruling. Appellate courts may overturn the injunction, and a final resolution could take months or longer. Reporting requirements, deadlines, and enforcement mechanisms remain subject to change.
Next Steps:
MGO recommends reviewing your reporting status with legal counsel to determine the best approach for your organization. For additional guidance, refer to FinCEN’s BOI reporting website.
For deeper insights, visit our article: Beneficial Ownership Reporting Deadline Approaches — Are You Prepared?