Corporate Transparency Act Enjoined: How should your company respond now?

Updated on 12.17.24

Government Moves for Stay of Nationwide Preliminary Injunction

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction enjoining the enforcement of the Corporate Transparency Act (CTA). The federal government promptly filed an appeal and on December 13, 2024, the government filed a motion asking the Fifth Circuit Court of Appeals to pause the preliminary injunction. The government has asked for a ruling by December 27, 2024. The Fifth Circuit has ordered an expedited timeline, and a decision could be issued this week.

If this motion is successful, the CTA’s filing requirements could be reinstated on short notice.

Woods Rogers will continue to monitor the case and the injunction.

Published on 12.10.24

The reporting requirement of the Corporate Transparency Act (CTA) was preliminarily enjoined on December 3, 2024, by an Order of the U.S. District Court for the Eastern District of Texas. The Court issued a nationwide preliminary injunction enjoining the CTA, including enforcement of the Reporting Rule, and declaring that reporting companies need not comply with the January 1, 2025, filing deadline. The preliminary injunction went into effect immediately.

The court has not declared the CTA unconstitutional. This is a preliminary ruling, but the court is initially agreeing with the concerns raised by the plaintiffs in the litigation. The Department of the Treasury has filed an appeal of the injunction. For now, reporting companies are not required to file Beneficial Ownership Information (BOI) Reports with the Financial Crimes Enforcement Network (FinCEN).

Under the CTA, entities formed or registered to do business prior to January 1, 2024, were required to file a BOI Report with FinCEN by January 1, 2025, unless an exemption applied. Entities formed in 2024 were required to file a BOI Report within 90 days of formation. This preliminary injunction has temporarily halted this filing requirement for all reporting companies.

FinCEN has issued a filing alert providing guidance for reporting companies. While FinCEN disagrees with the ruling, it is abiding by the injunction.

Going forward, please note:

• Reporting companies that have already submitted a BOI Report with FinCEN are not required to take any steps at this time.
• Reporting companies that have not yet submitted their BOI Report have the choice of either voluntarily filing the BOI Report or waiting for a final decision of the Courts.
• Reporting companies will not be subject to penalty or liability for not filing the BOI Report while the preliminary injunction is in effect.

Woods Rogers will continue to monitor developments regarding this case and the injunction. Our attorneys and Business Services staff will continue to assist clients with filing their BOI Reports with FinCEN if and when the injunction is lifted. Woods Rogers will also assist clients who wish to file their BOI Reports while the injunction is in effect. Please contact our team with your questions or concerns.