With the enactment of the Corporate Transparency Act (CTA), so-called “Reporting Companies” were required to disclose to the U.S. federal government, via the submission of a Beneficial Ownership information (BOI) Report to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN), the names and personal information of individuals who owned 25% or more of the company or who exerted substantial control over the company (e.g., CEO, COO, CFO, GC, President, Managing Member). Due to a recent development, however, enforcement of the CTA has been temporarily suspended.
Specifically, on December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction suspending the government’s enforcement of the Corporate Transparency Act (CTA) and the corresponding implementing regulations. This step amounts to a temporary pause of a Reporting Company’s obligation to comply with the CTA’s filing obligations. However, the government is now seeking to have that preliminary injunction set aside by the Fifth Circuit Court of Appeals. Should that effort be successful, the CTA filing obligations would likely be revived. Therefore, it may be prudent for pre-2024 Reporting Companies who had been required to file their Initial Beneficial Ownership Information (BOI) Report no later than January 1, 2025 continue their efforts to gather all necessary information to effectuate those filings as may be required. Similarly, all newly formed Reporting Companies should ensure they have documented all information, including the identity of company applicants, that would be required in a filing if their obligations are revived. Given the wealth of personal information requested by the government, some companies will want to consider discontinuing any further filings absent further guidance from the courts.
As a reminder, Reporting Companies are (i) domestic entities such as corporations and limited liability companies created by the filing of a document with a secretary of state or equivalent with the U.S.; or (ii) foreign entities that have registered to do business in the United States by the filing of a document with a secretary of state or equivalent. Trusts formed as an estate planning tool generally do not qualify as Reporting Companies. Similarly, General Partnerships generally do not qualify as Reporting Companies, while Limited Partnerships, including Limited Liability Partnerships, generally do qualify.
If you would like additional information, please contact your Nutter attorney at 617.439.2000.
This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.
