On December 3, 2024, a federal district court in Texas issued a preliminary injunction halting enforcement of the Corporate Transparency Act (CTA), effectively delaying the requirement for companies to submit Beneficial Ownership Information (BOI) to the Treasury Department. The case, Texas Top Cop Shop, Inc. v. Garland, resulted in a nationwide injunction that suspends enforcement of the CTA’s BOI reporting requirements. Key aspects of the ruling include:
- Reporting Delayed: The January 1, 2025, BOI reporting deadline has been postponed indefinitely.
- Penalties on Hold: FinCEN cannot enforce penalties for noncompliance while the injunction is in place.
- The Law Remains Intact: The injunction halts enforcement but does not invalidate the CTA.
The Department of Justice, on behalf of the Treasury Department, has appealed the ruling. Meanwhile, other courts in Virginia and Oregon have upheld the constitutionality of the CTA, adding to the uncertainty surrounding its future.
What Happens Next?
The situation remains fluid. The Fifth Circuit Court of Appeals, or even the Supreme Court, may overturn the injunction. Reporting requirements could be enacted with little notice if higher courts reverse the decision.
What Should Business Owners Do?
While enforcement is paused, business owners should take steps to stay prepared:
- Keep track of legal updates to ensure compliance if the injunction is lifted.
- Seek advice from legal or compliance experts to understand how potential changes may affect your business.
- Decide whether to delay filing or voluntarily comply while litigation is in process. Our recommendation is to file, as we believe the CTA is more likely than not to be upheld.
- Begin identifying beneficial owners and organizing required documentation, so your business is ready if reporting mandates are reinstated.
Christianson PLLP is closely monitoring updates as the future of BOI reporting unfolds.
