On December 3, 2024, a Federal District Court in Texas issued a nationwide preliminary injunction blocking the enforcement of the Corporate Transparency Act (the “CTA”). Prior to the injunction, the CTA required certain privately owned entities (“reporting companies”) to report information regarding the entities themselves and the individuals who, directly or indirectly, exercise “substantial control” over them or who hold at least a 25% ownership interest in the entities (their “beneficial owners”) to the Financial Crimes Enforcement Network of the U.S. Department of the Treasury (“FinCEN”).
For reporting companies formed prior to 2024, the deadline to file an initial beneficial ownership information report (a “BOI report”) was January 1, 2025, and all entities formed during 2024 were required to file a BOI report within 90 days of the date of formation. The District Court’s injunction temporarily suspends these reporting deadlines. Prior to the injunction, entities formed in 2025 or later were required to file a BOI report within 30 days of formation. These deadlines also will be suspended while the injunction remains in place.
Although this injunction may provide relief for entities previously required to meet the quickly approaching January 1, 2025 deadline, the government has appealed the injunction to the US Court of Appeals for the Fifth Circuit. Although we do not currently know how or when the appeal will be decided, there remains a possibility that the injunction could be lifted prior to January 1, 2025, either retaining the original deadline or requiring compliance within a new expedited filing deadline. Even if the injunction were to be upheld on appeal, it is a temporary order and the BOI reporting requirements under the CTA still may be enforced in the future.
As the ruling stands, reporting companies are not currently required to file BOI reports in compliance with the CTA. Given the uncertainty regarding the ultimate fate of the CTA, for the time being, we recommend continuing the process of determining which entities meet the definition of a reporting company, identifying beneficial owners and gathering the required information for BOI reports in order to be prepared to meet any applicable filing deadlines, including January 1, 2025.
Please contact your Sheehan Service Partner if you have any questions.
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