CTA Injunction Update

I previously reported on the nationwide injunction that blocks enforcement of the Corporate Transparency Act (CTA). The CTA requires certain small businesses, under threat of fines and/or imprisonment, to submit detailed information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) within the US Treasury Department. (You may find more information about the CTA here.)

Litigants are challenging the legality of the CTA on several grounds, including privacy concerns under the Fourth Amendment and issues related to the Constitution’s Commerce Clause.

In response to the injunction, FinCEN has announced that reporting companies are not currently required to file beneficial ownership information (BOI) and will not face penalties for non-compliance while the injunction remains in effect. However, reporting companies may choose to voluntarily submit BOI reports to FinCEN.

Under the CTA:

• Companies created before 2024 must file their initial BOI by December 31, 2024.

• Companies created in 2024 were required to file their initial BOI within 90 days of their registration becoming effective.

• Companies created after 2024 will have only 30 days to file following state registration.

The US Department of Justice has already appealed the Texas district court’s injunction. We will monitor the progress of this appeal as it moves through the appellate courts.

If you are a business owner subject to the CTA but have not yet filed your initial BOI report, you may file voluntarily at this time. However, I strongly recommend consulting your legal advisors to determine whether filing is advisable and to prepare for potential developments in this case.