Update: CTA Reporting Requirement for BOI Suspended Again

CTA Reporting Requirement For BOI Is Suspended…Again

The last full week of 2024 brought a whirlwind of action concerning the Corporate Transparency Act (CTA). On Dec. 23, 2024, in Texas Top Cop Shop, Inc., et al. v. Merrick Garland, No. 24-40792, 5^th Cir., 2024, the Fifth Circuit Court’s motions panel entered a stay of the Dec. 3 federal court preliminary injunction entered in that case by the Eastern District of Texas. The lower court decision enjoined enforcement of the CTA nationwide, including compliance with the CTA’s beneficial ownership information (BOI) reporting requirements. The United States Fifth Circuit Court's Dec. 23 stay once again required reporting companies to file beneficial ownership information with FinCEN but extended reporting time for companies with a Jan. 1, 2025 deadline to Jan. 13, 2025.

However, that decision was almost immediately reversed when, on Dec. 26th, the Fifth Circuit’s merits panel vacated a portion of the decision of the motions panel, reviving the nationwide preliminary injunction enjoining enforcement of the CTA. The result is that currently, there is a preliminary injunction enjoining enforcement of the CTA and all reporting requirements, including the BOI reporting requirements. See the FinCEN alert dated Dec. 27, 2024, found at https://fincen.gov/boi:

“In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”

In addition to the Fifth Circuit Court of Appeals case, there are three other cases involving the CTA in federal circuit courts. They are:

• Community Associations Institute v. Yellen, No. 24-2118, 4^th Cir., 2024;
• Firestone v. Yellen, No. 24-6979, 9^th Cir. 2024; and
• National Small Business United v. Yellen, No. 24-10736, 11^th Cir., 2024.

Keep in mind that the status of these cases is fluid, and it is possible that the enforcement of the CTA and its reporting requirements could be reinstated at any time. If that happens, certain victims of Hurricane Milton, Hurricane Helene, Hurricane Debby, Hurricane Beryl, and Hurricane Francine may receive extended deadlines similar to the 6-month extensions granted from the original reporting dates.   Here is a  link to the blog posting about the hurricane related extensions earlier granted by FinCEN.  
https://www.thefund.com/member/general-counsel-blog/november-2024/low-stress-updates

Crazy eh?

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Melissa Jay Murphy
Executive Vice President, Chief Legal Officer,
and General Counsel