12/23/2024
Client Alert: FinCEN temporarily suspends Beneficial Ownership Reporting
Compliance/Investigations
Background
Last week on December 3rd, a District Court judge in Texas preliminarily enjoined the beneficial ownership information (“BOI”) reporting requirements imposed by the Corporate Transparency Act (the “CTA”).
A preliminary injunction is a court order which prevents a party from taking specified actions until the case is resolved. Such an injunction will remain in effect until the court issues a final decision, modifies the injunction, or overturns the decision on appeal.
On December 5th, two days after the preliminary injunction was granted, the Department of Justice (the “DOJ”) filed a formal notice of appeal. The notice stated that the DOJ seeks a stay of the injunction, which means that the Financial Crimes Enforcement Network (“FinCEN”) will not be able to enforce the CTA during this time.
Pursuant to the CTA, all reporting companies created or registered before January 1, 2024 have until January 1, 2025 to file their initial BOI report with FinCEN, while companies registered for the first time in 2024 have 90 calendar days after receiving notice of the company’s creation or registration to file their initial BOI report.
What does this mean for CTA reporting companies?
If your company has already filed its BOI report, there is no need to take action.
If your company has yet to file its initial BOI report, please note that it is not required to do so until CTA enforcement resumes. However, reporting companies may still elect to do so in order to be prepared in the event that the injunction is lifted or stayed before the end of the year.
