December 2024
Delay in January 1, 2025, Beneficial Ownership Filing: What You Need to Know
The Corporate Transparency Act (CTA), a key piece of legislation designed to combat financial crimes through beneficial ownership reporting, has encountered a major legal hurdle. On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction halting enforcement of the CTA’s reporting requirements. As a result, businesses are no longer required to meet the January 1, 2025, compliance deadline. The ruling, part of Texas Top Cop Shop, Inc. v. Garland, suggests the CTA may exceed Congress’s constitutional authority, although a final determination on its legality has not been made.
For now, businesses are temporarily relieved from filing Beneficial Ownership Information (BOI) reports with the Financial Crimes Enforcement Network (FinCEN). While FinCEN continues to accept voluntary filings, companies face no liability for not submitting reports during this period. However, this injunction is not permanent; the Department of Justice has appealed the ruling, and the Fifth Circuit Court of Appeals could reinstate the compliance requirements with little notice.
We advise our business clients to take a proactive approach by preparing the necessary documentation and conducting ownership analysis to remain ready for any changes. This pause also presents an opportunity to review governance, update agreements, and address any compliance gaps. As legal challenges and appeals unfold, staying informed and maintaining readiness will ensure a smoother transition should reporting obligations resume.