UPDATED ON DECEMBER 28, 2024
A December 3, 2024 decision in a federal case in the Eastern District of Texas, Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.), led to a nationwide deferral of mandatory reporting under the Corporate Transparency Act (CTA). As indicated on the Beneficial Ownership Information Reporting | FinCEN.gov site, “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.”
Since that original decision, the government filed notice of appeal which was then followed by a panel from the U.S. Court of Appeals Fifth Circuit on December 23, 2024 granting a stay of the district court’s preliminary injunction and a modest extension of the original deadline to mid-January, 2025 for many filing requirements. Three days later, however, a different panel of the U.S. Court of Appeals for the Fifth Circuit issued an order vacating the December 23, 2024 order and essentially reinstating the delay/injunction from the December 5th decision. Accordingly, companies are not currently required to file beneficial ownership information with FinCEN.
We note that there have been several cases filed against the mandatory reporting under CTA, with this particular action being the first to result in a nationwide deferral of such reporting. It should be noted that there will continue to be litigation regarding this matter and there is also the potential for legislation or other similar activity that could alter the nature of the reporting.
Bottom line, as of December 26, 2024’s ruling, companies can choose to report BOI information, but may also decide to wait for more definitive rulings before doing so without penalty. You are encouraged to revisit the FinCEN site from time to time and look for news on any further activity.
