By Ron Lefebvre and Mark Fischer
As we previously wrote, the 2021 Corporate Transparency Act (CTA) required most businesses to file a Beneficial Ownership Information (BOI) report with the Financial Crimes Enforcement Network (FinCEN) on or before January 1, 2025. Our most recent article on this subject is available at: https://www.ymfzlaw.com/business-reporting-deadlines/.
On December 3, 2024, however, a federal district court in Texas immediately suspended the enforcement of the CTA on a nationwide basis. The court granted a preliminary injunction to the plaintiff, finding that “the CTA is likely unconstitutional as outside of Congress’s power” and rejecting the government’s argument that the CTA is authorized under the Commerce Clause of the U.S. Constitution. See: Tex. Top Cop Shop, Inc. v. Garland Case No. 4:24-CV-478 (ED TX 2024):
“The CTA is likely unconstitutional as outside of Congress’s power. Because the Reporting Rule implements the CTA, it is likely unconstitutional for the same reasons. . . . Having determined that Plaintiffs have carried their burden, the Court GRANTS Plaintiff’s Motion for a Preliminary Injunction. Therefore, the CTA, 31 U.S.C. § 5336 is hereby enjoined. Enforcement of the Reporting Rule, 31 C.F.R. 1010.380 is also hereby enjoined, and the compliance deadline is stayed under § 705 of the APA. Neither may be enforced, and reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”
While the outcome of that litigation remains uncertain – and the final decision by the court will undoubtedly be appealed – as of today, the CTA is unenforceable. Therefore, you will not be fined or penalized for failing to file a BOI report with FinCEN by the January 1, 2025 deadline.
Notably, this ruling does not affect the Pennsylvania state filing requirement described in our October 9, 2024 article linked above. Further, while enforcement of the CTA is currently suspended, the status of its suspension could change pending additional legal decisions. Businesses should continue to monitor these decisions and the related CTA filing requirements to avoid incurring civil and criminal penalties for failure to comply.
Please contact our firm if you would like assistance with respect to these compliance matters.