Please note that as of the date of this notice, reporting companies are not currently required to file the BOI Report and the filing of the BOI Report for reporting companies is voluntary.
Corporate Transparency Act
The Corporate Transparency Act (the “CTA”) was enacted as part of the U.S. government’s efforts to identify illicit actors using corporate structures to conceal their identities and launder ill-gotten gains through the United States. The Reporting Rule issued by Financial Crimes Enforcement Network (“FinCEN”) on September 30, 2022 (the “FinCEN Reporting Rule”) seeks to implement the beneficial ownership information (“BOI”) reporting provisions of the CTA through the filing of beneficial ownership information reports (the “BOI Reports”). Effective January 1, 2024, reporting companies, as defined in the FinCEN Reporting Rule, were required to disclose information regarding their beneficial owners by filing a BOI Report.
Nationwide Preliminary Injunction (December 3, 2024)
On December 3, 2024, the Federal District Court of the United States for the Eastern District of Texas, under case Texas Top Cop Shop, Inc. v. Garland, E.D. Tex., No. 4:24-cv-00478 (“TTCS”) issued a nationwide preliminary injunction that enjoined the enforcement of the CTA, including the implementation of BOI requirements (the “Injunction”). Following the court’s order granting the Injunction in TTCS, on December 3, 2024, reporting companies were no longer required to file the BOI Report with FinCEN and were not subject to liability for non-compliance while the Injunction remained in effect.
Stay of Injunction (December 23, 2024)
On December 23, 2024, the motions panel of the U.S. Court of Appeals for the Fifth Circuit issued a stay on the Injunction (the “Stay”) pending the outcome of the Department of the Treasury’s ongoing appeal of the district court’s order. Pursuant to the Stay, reporting companies were once again required to file the BOI Report under the CTA. FinCEN promptly issued a statement extending the reporting deadlines.
Reinstatement of Injunction (December 26, 2024)
However, on December 26, 2024, the merits panel of the U.S. Court of Appeals for the Fifth Circuit (a different panel than the motions panel that enacted the Stay), issued an order vacating the part of the motions panel order granting the Stay to “preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments”. As such, the Injunction (which prohibited the mandatory nature of the BOI Reports) has been reinstated and, while the order remains in force, reporting companies, once again, arenot required to file the BOI Report with FinCEN and failure to do so will not subject them to liability. Notwithstanding the foregoing, reporting companies can still voluntarily file a BOI Report.
Next Steps
Even though at this time the filing of the BOI Report is not required, it is recommended that, at a minimum, reporting companies continue to gather all of the necessary information in preparation to complete and file the BOI Report in case the Injunction is lifted given that there is no guarantee as to what additional time to comply will be provided.
This document has been prepared for informative purposes. It is not intended, and should not be relied upon, as legal advice. If you have any questions or would like more information on the topic, or about its possible effect(s) on policy or operational matters, please contact us at your convenience.