What you need to know about the Corporate Transparency Act 2024

MANY BUSINESSES ARE NOW REQUIRED TO FILE REPORTS WITH THE FINANCIAL CRIMES ENFORCEMENT NETWORK

UPDATE: Last week on December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction precluding the Financial Crimes Enforcement Network (“FinCEN”) at the Department of Commerce from enforcing the Corporate Transparency Act (“CTA”) and its Beneficial Ownership Information (“BOI”) reporting requirements. The CTA’s regulations required most companies and corporations that were created before January 1, 2024, to report their BOI to FinCEN by January 1, 2025, or risk daily fines. Following a similar decision of the U.S. District Court for the Northern District of Alabama that found the same reporting regulations unconstitutional but only blocked enforcement against the named plaintiffs, the Texas Court preliminary injunction is nationwide and immediate.  The Court noted it applied to “approximately 32.6 million existing reporting companies.”

On December 5, 2024, the Department of Justice appealed the order to the Fifth Circuit Court of Appeals. It is not clear how quickly the Fifth Circuit could rule on the appeal and whether it will lift the District Court’s stay on reporting.

Qualified reporting companies that already filed BOI reports with FinCEN do not need to take any steps at this time.  If you are a reporting company that has not yet filed reports with FinCEN, the preliminary injunction means that you do not have to file a BOI Report now, and maybe never unless the preliminary injunction is lifted. It appears that the preliminary injunction only applies to reporting companies created before January 1, 2024. It is not clear whether the injunction relieves newly created entities from filing beneficial ownership reports or relieves companies from updating previously filed reports, but it does halt the enforcement of the BOI reporting rule in connection with established reporting companies.  

Depending on the changes in administration and the Firth Circuit’s timeline, it is hard to say whether the Texas Court’s decision will be reversed. Nonetheless, reporting companies should be prepared to file their BOI reports on short notice if the government’s appeal is ultimately successful.  Until the order becomes permanent or reversed, please keep an eye on this page for updates. The Attorneys at Goodman Allen Donnelly are available to discuss your options and any necessary steps in the event the injunction is overturned on appeal and the reporting deadline could be reinstated.

Please feel free to contact Harrison Gibbs or Peter Mellette if you have any questions or would like assistance in navigating the new rules.  Please note that we will not be filing reports on behalf of our clients and such filings must be made by the company itself.