Corporate Transparency Act: Temporary Reprieve from Beneficial Ownership Reporting Obligations
December 11, 2024
CORPORATE TRANSPARENCY ACT:
TEMPORARY REPRIEVE FROM BENEFICIAL OWNERSHIP REPORTING OBLIGATIONS
The reporting required by the Corporate Transparency Act, 31 USC § 5336 (the “Act”) has been put on hold. On December 3, 2024, in Texas Top Cop Shop, Inc., et al. v. Garland, et al., the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction precluding the Department of the Treasury from enforcing the Act. This means that “reporting companies” under the Act will not have to file any information with the Financial Crimes Enforcement Network (“FinCEN”) for the time being.
Prior to the injunction, reporting companies would have been required to submit certain beneficial ownership information to FinCEN by December 31, 2024.
FinCEN has updated its website with the following guidance:
In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force.
The government filed an appeal in this case on December 5, 2024, so there is more to come including the possibility that the reporting required under the Act could be reinstated.
As a reminder, there are civil and criminal penalties for a willful failure to comply with the Act, but until the temporary injunction is lifted, business owners can rely on FinCEN’s guidance above.
We will be tracking this case (and others like it) and updating this blog as this matter evolves.