Update on Beneficial Ownership Information Reporting and the Corporate Transparency Act
From NATP, we want to inform you of significant developments that impact your work, so we want to share the latest updates regarding the Corporate Transparency Act (CTA) and its beneficial ownership information (BOI) reporting requirements.
On Dec. 3, 2024, a federal court issued a nationwide preliminary injunction in the case Texas Top Cop Shop, Inc., et al. v. Garland, et al., temporarily halting the enforcement of the CTA’s BOI reporting requirements. This order stays all deadlines for reporting companies to comply with the CTA, and reporting companies are not currently required to file BOI with the Financial Crimes Enforcement Network (FinCEN). Importantly, no liability will arise for failing to file BOI while the injunction is in effect. Despite this pause, companies may want to consider maintaining readiness by continuing to collect and file Beneficial Ownership Information to ensure compliance if the injunction is lifted and reporting deadlines are reinstated.
As background, the CTA is a federal law designed to improve financial transparency by requiring certain businesses to report information about their beneficial owners to the FinCEN. Beneficial owners exercise significant control over a company or own a substantial interest in it. The CTA aims to create a centralized database of this information to assist in combating illicit activities such as money laundering, tax fraud, and terrorism financing while reducing the misuse of anonymous business entities.
The Department of Justice has filed an appeal, and while the litigation continues, FinCEN has confirmed it will comply with the court’s order as long as it remains in effect. Other courts across the country have upheld the CTA, and the Department of the Treasury maintains that the CTA is constitutional.
We will monitor this situation closely and inform you of any significant changes.