Update – 12/30/2024
Last Thursday, a federal appeals court reinstated a nationwide injunction halting enforcement of BOI reporting requirements, reversing an order the same court issued earlier in the week. The Fifth Circuit Court of Appeals, in its latest order, said it was reinstating a lower court’s injunction “in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments,” referring to the panel of judges who will decide the appeal.
For more information visit: Beneficial Ownership Information Reporting | FinCEN.gov
A ruling by the U.S. District Court for the Eastern District of Texas granted a preliminary injunction blocking the U.S. Department of Treasury from enforcing the Corporate Transparency Act’s (CTA) beneficial ownership information (BOI) reporting requirements. Under the injunction, the CTA and the BOI reporting rule cannot be enforced, and reporting companies need not comply with the January 1, 2025, BOI reporting deadline pending a further order of the court.
In the case Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-CV-478 (E.D. Texas 12/3/24), the National Federation of Independent Business (NFIB) argued that the CTA is unconstitutional in that it exceeds Congress’s authority over the states, improperly compels speech and contradicts the right of anonymous association guaranteed by the First Amendment, and violates the Fourth Amendment by forcing the disclosure of private information. Because NFIB and its nearly 300,000 members were a party to this case, the judge blocked enforcement of the BOI reporting requirements nationwide.
The beneficial ownership information (BOI) reporting requirements began on January 1, 2024, as mandated by the 2021 CTA. Under the CTA’s rules, covered entities would have had to provide information about certain owners and officers to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Failure to comply with these requirements came with significant penalties. The information required for filing was initially designed to be used by various governmental organizations to address issues of money laundering and criminal activities including tax evasion, human trafficking, and sanction evasions using shell companies.
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We will continue to monitor this situation. Additional guidance from the U.S. Treasury Department and the Financial Crimes Enforcement Network (FinCEN) is anticipated, and we will continue to provide updates. If you have any questions related to the Beneficial Ownership Information reporting and this latest development, Selden Fox can help. For additional information call 630.954.1400 or click here to contact us.
