Earlier this year, we issued an alert about reporting requirements under the Corporate Transparency Act (CTA), a new federal law intended to prevent money laundering, which required many businesses to file beneficial ownership information reports (BOIRs) with the Treasury Department starting in 2024. The CTA imposed significant compliance obligations and penalties for non-compliance.
On December 3, a federal court in the Eastern District of Texas issued a nationwide preliminary injunction blocking enforcement of the CTA and its implementing regulations, thereby suspending enforcement of the CTA pending further proceedings to determine whether the law is constitutional.
What does this mean for your business?
If you have already filed a BOIR, there is nothing further to do at this time. For businesses that were in the process of filing, so as to not lose momentum, we suggest gathering the beneficial ownership information necessary to file a BOIR in case the injunction is reversed in the future.
All businesses should remain apprised of new developments regarding this case and others that may affect the enforcement of and reporting obligations under the CTA. We will continue monitoring the litigation related to the CTA for material developments.
Please contact us if you have any questions about how this ruling affects your business.
Client Alert Update: Treasury Department Guidance on the CTA Injunction
As we previously reported, a December 3 court ruling issued a nationwide preliminary injunction against enforcement of the Corporate Transparency Act (CTA). On December 9, the Treasury Department issued new guidance clarifying the implications of the injunction for reporting companies:
- No Requirement to File: Reporting companies are not currently required to file Beneficial Ownership Information Reports (BOIRs) with FinCEN and will not face liability for failing to do so while the injunction remains in effect.
- Voluntary Submissions Accepted: Despite the suspension of mandatory reporting, FinCEN continues to accept voluntary submissions of BOIRs for companies that wish to proactively comply.
The Treasury Department reiterated its commitment to the goals of the CTA, emphasizing its importance in combating illicit finance threats and ensuring a level playing field for law-abiding businesses. However, the Department of Justice has filed an appeal of the preliminary injunction, and litigation challenging the CTA remains ongoing in multiple courts across the country.
We recommend businesses stay informed on further developments and consider preparing beneficial ownership information in case the injunction is lifted. Please contact us if you have questions about how this guidance affects your reporting obligations.
