The Corporate Transparency Act (CTA), which went into effect on January 1, 2024, mandates that almost all LLC owners submit annual beneficial ownership reports (BOI) to the Financial Crimes Enforcement Network (FinCEN). However, on December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction barring enforcement of the CTA nationwide.
The court held that the CTA is “likely unconstitutional as outside of Congress’s power.” As a result, the court stated that any entities that would be deemed reporting companies under the CTA “need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”
The U.S. Department of Justice has filed an appeal but in the meantime, FinCEN issued a statement confirming that reporting companies will not be subject to liability if they fail to file BOI reports while the injunction is in place.
While this ruling does not mean that the CTA has been conclusively repealed or found unconstitutional, it does apply nationwide, so the requirement to file a BOI report is currently suspended. Genova Burns will continue to monitor the status of any appeals and provide further updates.
