What this is: The court proceedings regarding the Corporate Transparency Act (CTA) are ongoing, and the Texas Federal District Court’s nationwide preliminary injunction issued on December 3, 2024 (“the injunction”) is still in force. Therefore, no “reporting company” (as that term is defined in the CTA and its implementing regulations) is currently required to file a Beneficial Ownership Information (BOI) report with FinCEN.
What this means: Shortly after the court issued the injunction, FinCEN temporarily shut off access to all authorized third-party platforms as a precaution to ensure that it is made clear to filers that no BOI reporting is currently required while the Court’s preliminary injunction is in force. FinCEN is, however, accepting voluntary BOI reports. However, as of today, December 20, 2024, we are pleased to announce that FinCEN has reconnected Cogency Global’s authorized platform, CTA Central™.
Cogency cannot advise on whether a non-exempt reporting company should voluntarily file a BOI report while the injunction is in force. We recommend that you consult your legal counsel on that matter. However, if you do decide to submit a voluntary BOI report to FinCEN, you have the option of using CTA Central™ to do so. For further information on our CTA services, please visit our CTA Resources page or contact your Cogency Global representative.
The status of the CTA is in flux. It is important to keep close watch on CTA developments, particularly in case the injunction is lifted at some point, as BOI reporting could become mandatory again.
For now, the following is the latest information on the injunction taken directly from FinCEN’s website:
“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.
The Corporate Transparency Act (CTA) plays a vital role in protecting the U.S. and international financial systems, as well as people across the country, from illicit finance threats like terrorist financing, drug trafficking, and money laundering. The CTA levels the playing field for tens of millions of law-abiding small businesses across the United States and makes it harder for bad actors to exploit loopholes in order to gain an unfair advantage.
On Tuesday, December 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.), a federal district court in the Eastern District of Texas, Sherman Division, issued an order granting a nationwide preliminary injunction that: (1) enjoins the CTA, including enforcement of that statute and regulations implementing its beneficial ownership information reporting requirements, and, specifically, (2) stays all deadlines to comply with the CTA’s reporting requirements. The Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024.
Texas Top Cop Shop is only one of several cases in which plaintiffs have challenged the CTA that are pending before courts around the country. Several district courts have denied requests to enjoin the CTA, ruling in favor of the Department of the Treasury. The government continues to believe—consistent with the conclusions of the U.S. District Courts for the Eastern District of Virginia and the District of Oregon—that the CTA is constitutional.
While this litigation is ongoing, FinCEN will comply with the order issued by the U.S. District Court for the Eastern District of Texas for as long as it remains in effect. Therefore, 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. Nevertheless, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
