On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction in Texas Top Cop Shop, Inc., et al. v. Garland, et al., temporarily halting the enforcement of the Corporate Transparency Act (CTA) and its beneficial ownership information (BOI) reporting requirements. In a December 6 alert posted on its website following the decision, FinCEN highlighted that the law has been previously upheld in other courts and that the Department of Justice has filed a Notice of Appeal to reinstate the law.
Where does this leave the millions of businesses that have yet to file before the December 31, 2024 deadline? In the alert, FinCEN stated that reporting companies are not currently required to file BOI reports and will not face penalties for non-filing during the injunction. However, voluntary BOI report submissions remain permissible.
Given the uncertainty over the efforts to overturn the injunction and how quickly FinCEN would seek to enforce the law and its civil and criminal penalties, should those efforts prove successful, we are continuing to assist clients that are well along in the registration process and that do not object to complying with the CTA voluntarily, in completing the process ahead of the original deadline. For companies that were unaware of the BOI filing requirements or were waiting until closer to the deadline to start assembling the necessary materials, we cannot advise when the injunction will be lifted, if ever, and how much of a filing extension FinCEN will provide, if any. It will be up to your organization whether to voluntarily move forward with the filing in accordance with the original December 31 deadline or to hold off and keep a watchful eye for developments.
If you would like to learn more, we have written extensively on the CTA and its requirements, including most recently on our website here: https://www.pullcom.com/newsroom-publications-end-year-deadlines-approaching.
We will continue to provide updates as the legal situation evolves.
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