In the last month of 2024, there has been a lot of confusion and contradiction surrounding the obligations of companies to report their beneficial ownership information ("BOI") to the Federal government's Financial Crimes Enforcement Network ("FinCEN") under the Corporate Transparency Act ("CTA").
As we reported earlier this month, on December 3, 2024 the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against enforcement of the CTA. Then on December 23, 2024, the Fifth Circuit Court of Appeals stayed the nationwide injunction, effectively reinstating the requirement for companies to report their BOI to FinCEN. On December 26, 2024, the Fifth Circuit Court of Appeals reversed course and reinstated the nationwide injunction, again suspending companies' reporting obligations under the CTA.
This has created confusion for small business owners attempting to comply with the law leading up to the deadline of January 1, 2025. To clarify, on December 27, 2024 FinCEN released a statement on its website confirming that reporting companies are not currently required to submit BOI reports and are not subject to liability if they fail to do so while the Fifth Circuit Court of Appeals' most recent order remains in force. Companies may continue to report on a voluntary basis if they so choose.
Given these recent developments, companies can continue to put on hold their efforts to prepare and file BOI reports until there is a further decision by the courts. We will continue to monitor this case and will issue further updates as necessary.
If you have any questions regarding this update and its impact on your business, do not hesitate to contact your WHP counsel.
This article provides an overview and summary of the matters described therein. It is not intended to be and should not be construed as legal advice on the particular subject.