On December 3, 2024, the U.S. District Court for the Eastern District of Texas (the “Court”) issued a preliminary injunction blocking enforcement of the Corporate Transparency Act (CTA). As a reminder, the CTA requires that certain domestic and foreign entities doing business in the United States disclose certain information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). The Court also stayed the impending January 1, 2025, compliance deadline.1 See Sidley’s December 5, 2024, update for more information about the case.2
FinCEN responded to the Court’s decision on December 7, 2024, by posting an alert to the FinCEN website, providing that “reporting companies are not currently required to file their beneficial ownership information with FinCEN and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect.” However, reporting companies may continue to voluntarily submit beneficial ownership information reports (BOIR).3
The Department of Justice, on behalf of the Department of the Treasury, entered a notice of appeal in the case on December 5, 2024, indicating that the government will seek review of the Court’s order.4 Due to the uncertainty of the outcome of the case, reporting companies may wish to continue to review their obligations under the CTA, including identifying beneficial owners and gathering information that would be required for any BOIR filings, in the event the preliminary injunction is stayed or reversed. Reporting companies should also continue to monitor for additional updates or guidance from FinCEN.
1 Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-478 (E.D. Texas Dec. 3, 2024).
2 Texas Federal Court Issues Preliminary Injunction Against Corporate Transparency Act (December 5, 2024).
3 FinCEN, Alert: Impact of Ongoing Litigation – Deadline Stay – Voluntary Submission Only.
4 Notice of Appeal, Texas Top Cop Shop, Inc. v. Garland, No. 4:24-cv-478, 2024 WL 4953814 (E.D. Tex. Dec. 3, 2024).
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