The CTA, effective as of January 1, 2024, is designed to combat money-laundering, terrorism, tax evasion, and other financial crimes. It mandates that certain domestic and foreign business entities registered to do business in the United States—including LLCs, corporations, limited partnerships, and other closely held entities—disclose information to the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the United States Treasury Department. Generally speaking, the CTA affects smaller and non-publicly traded entities.
Previously, entities that were in existence before January 1, 2024 had until December 31, 2024 to file the CTA mandated report, while entities formed in 2024 had to file within 90 days of receiving notice of creation or registration. However, on December 6, as a result of a Texas court order, the Treasury Department issued a notice that reporting companies are not currently required to file reports while the order is in force.
Nevertheless, reports may continue to be filed voluntarily.
Please see the full notice below:
In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.
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The Corporate Transparency Act (CTA) plays a vital role in protecting the U.S. and international financial systems, as well as people across the country, from illicit finance threats like terrorist financing, drug trafficking, and money laundering. The CTA levels the playing field for tens of millions of law-abiding small businesses across the United States and makes it harder for bad actors to exploit loopholes in order to gain an unfair advantage.
On Tuesday, December 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.), a federal district court in the Eastern District of Texas, Sherman Division, issued an order granting a nationwide preliminary injunction that: (1) enjoins the CTA, including enforcement of that statute and regulations implementing its beneficial ownership information reporting requirements, and, specifically, (2) stays all deadlines to comply with the CTA’s reporting requirements. The Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024.
Texas Top Cop Shop is only one of several cases in which plaintiffs have challenged the CTA that are pending before courts around the country. Several district courts have denied requests to enjoin the CTA, ruling in favor of the Department of the Treasury. The government continues to believe—consistent with the conclusions of the U.S. District Courts for the Eastern District of Virginia and the District of Oregon—that the CTA is constitutional.
While this litigation is ongoing, FinCEN will comply with the order issued by the U.S. District Court for the Eastern District of Texas for as long as it remains in effect. Therefore, reporting companies are not currently required to file their beneficial ownership information with FinCEN and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect. Nevertheless, reporting companies may continue to voluntarily submit beneficial ownership information reports.
For more information regarding the CTA and to file CTA reports for an entity, please visit the FinCEN website: https://www.fincen.gov/boi. Additionally, FinCEN has published a helpful guide for small entity compliance with the CTA on its website: https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide_FINAL_Sept_508C.pdf. You can file these reports directly online or engage a third-party provider, such as Corporation Service Company (CSC), CT Corp., or Cogency, to assist you.
