Corporate Transparency Act Update: Temporary Halt on FinCEN’s BOI Reporting Enforcement: What It Means for Businesses

reading time: 11 minute(s)

Updated FinCEN Notice (December 23, 2024):
In light of a December 23, 2024, federal Court of Appeals decision, reporting companies, except as indicated below, are once again required to file beneficial ownership information with FinCEN. 

However, because the Department of the Treasury recognizes that reporting companies may need additional time to comply given the period when the preliminary injunction had been in effect, FinCEN has extended the reporting deadline. More information is available on FinCEN’s website at https://www.fincen.gov/boi.
Learn More

Recently, the U.S. District Court for the Eastern District of Texas issued an order temporarily stopping the enforcement of the Corporate Transparency Act (CTA) and its related Beneficial Ownership Information (BOI) reporting rule by FinCEN. This decision means that reporting companies are currently not required to file their beneficial ownership information and will not face penalties for non-compliance while the injunction remains in effect. However, businesses can still voluntarily submit their BOI reports with FinCEN. 

As a result of this injunction, TaxBandits is no longer accepting BOI reports at this time. 

In this blog, we will explore the implications of this injunction and what companies need to know moving forward.

Overview of the Corporate Transparency Act and BOI Reporting Rule

The CTA requires most legal entities created in or registered before January 1, 2024, in the United States to disclose their beneficial ownership information to FinCEN. The BOI Reporting Rule, introduced by FinCEN to enforce the CTA, sets a compliance deadline for existing businesses of January 1, 2025.

The Recent Court Ruling

On Tuesday, December 3, 2024, the U.S. District Court for the Eastern District of Texas, Sherman Division, issued a nationwide preliminary injunction in the case Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.). The order:

1. Blocks the enforcement of the Corporate Transparency Act (CTA), including its beneficial ownership information (BOI) reporting requirements.
2. Pauses all deadlines related to compliance with the CTA’s BOI reporting obligations.

As of December 5, 2024, the Department of Justice, representing the Department of the Treasury, has filed a Notice of Appeal.

FinCEN’s Current Position

While the litigation is ongoing, FinCEN will comply with the court’s order for as long as it remains in effect. This means:

• Reporting companies are not currently required to file BOI reports with FinCEN.
• No penalties or liability will be imposed for failure to file while the injunction is in place.

However, reporting companies may still voluntarily submit BOI reports during this period. See FinCEN’s BOI page for an overview.

What Does This Mean for Businesses?

While the injunction is in effect, FinCEN will not enforce the CTA, and businesses will not face penalties for failing to file BOI reports. Businesses should remain cautious and monitor any changes in their reporting obligations.

TaxBandits’ Position on BOI Reporting

At TaxBandits, we are committed to supporting businesses during this period of uncertainty. In light of the recent injunction:

• TaxBandits has paused the acceptance of BOI reports at this time.
• We will continue to closely follow this case, including the Department of Justice (DOJ) appeal and any subsequent court decisions.
• As soon as new guidance becomes available, we will notify our clients and provide the necessary support to help businesses meet their obligations.

What’s Next?

In these evolving circumstances, staying informed and prepared is essential. TaxBandits remains dedicated to keeping you updated with accurate and timely information as the situation develops.