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 federal Corporate Transparency Act and its implementing regulations (the “CTA”). On December 23, 2024, the Fifth Circuit Court of Appeals stayed such injunction and the Financial Crimes Enforcement Network (FinCEN) published an alert that established updated deadlines for reporting companies to file their initial beneficial ownership information report (BOIR) with FinCEN pursuant to the CTA. However, on December 26, 2024, a different panel of the Fifth Circuit vacated the stay of the injunction and FinCEN confirmed in an alert issued on December 27, 2024 that reporting companies are not subject to liability if they fail to file their initial BOIR while the injunction remains in effect. Accordingly, “reporting companies” are currently relieved from their filing obligations under the CTA.
Because the status of the CTA may change on short notice if the government’s appeal is successful, a reporting company should, at a minimum, closely monitor the status of such appeal and compile all of the information needed to file its BOIR (and make all of the required decisions with respect to its BOIR), so that the reporting company can promptly file its BOIR if and when the injunction is overturned or limited. Although FinCen may further extend the deadline for compliance in such instance, its December 27th alert did not commit to that course of action. A reporting company should also consider filing its BOIR on a voluntary basis during the pendency of the appeal to ensure compliance with the CTA regardless of the outcome of the appeal.
If you have any questions about these issues, please contact our Managing Partner, Paul T. Rushton, at prushton@rjglaw.com or one of the other attorneys in our Business & Finance Department.
Original source can be found here.