Breaking News | Corporate Transparency Act Filings Paused Under Nationwide Injunction
This is an important follow-up to our prior eAlerts (here and here) on the Corporate Transparency Act, which requires that corporations, LLCs and other business entities report to the Treasury’s Financial Crimes Enforcement Network (FinCEN) and disclose personal information about their management and significant owners.
On December 3, 2024, U.S. District Judge Amos Mazzant from the Eastern District of Texas issued a nationwide preliminary injunction against enforcement of the CTA in Texas Top Cop Shop, Inc. v. Garland (you can view the order here). As a preliminary injunction, this order is a stay on enforcement until the parties have a chance to litigate the matter fully.
This order is unlike prior injunctions against the CTA (see here) which only applied to the litigants before the court. It stays the compliance deadlines (January 1, 2025 for entities formed before 2024, 30 or 90 days for entities formed afterwards) not just for the litigants in that case, but for all entities nationwide. The order does not prevent entities from submitting reports if they wish to do so.
Judge Mazzant’s order is not a final decision, so FinCEN can (and likely will) appeal it. However, an appeal will not automatically stay the injunction–and it is unlikely that there will be any resolution before the looming January 1, 2025 deadline. It’s also possible that different District Courts will split on the validity of the CTA as cases wend their way through the system, creating a quagmire for reporting companies.
In the meantime, and given the previous January 1, 2025 deadline for companies to file their reports, reporting entities have the following options:
- Continue to perform due diligence and collect the information necessary to file the reports as our prior eAlerts note and, where possible, prepare a PDF of each report (as opposed to preparing the report using FinCEN’s on-line menu). The PDF of the report is available here). Simply click the “Prepare BOIR” button under the “File PD BOIR” header to download the PDF. If you prefer to not provide sensitive information to the government if you don’t have to, then keep a copy of the PDF report in your files; keep alert to developments (we will keep you updated); and submit if and when there is some resolution in FinCEN’s favor and FinCEN says that entities should resume filing.
- Otherwise, file the report if you like before the deadlines noted above (and scratch off an item on your “to do” list, enjoy the holidays and don’t worry about following developments).
While the ever-changing CTA landscape may give you whiplash, this approach will best prepare reporting entities to quickly comply to the best of their ability if the injunction is lifted for whatever reason. We will continue to provide updates as developments warrant.
