December 2024 – Important Update on BOI Reporting

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Important Update on BOI Reporting

 

Nationwide Injunction Temporarily Blocks BOI Reporting Requirements

A significant legal development has emerged regarding the Corporate Transparency Act (CTA) and Beneficial Ownership Information (BOI) reporting. On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction temporarily halting the enforcement of the CTA. This injunction impacts millions of businesses nationwide, effectively pausing the BOI reporting requirement.

Though this ruling currently puts a halt to BOI Reporting for businesses, it is not a permanent resolution, and the future of BOI Reporting and the CTA is still uncertain. See our previous newsletter for additional reference to the previous BOI Reporting requirement at this link.

 

What This Means for Your Business

If You Have Not Yet Filed BOI Reports:

– Do Not File at This Time: Unless future events reverse this injunction, businesses should not file BOI Reports or attempt to be in compliance with the CTA.

– Prepare In Case the Injunction is Lifted: This pause in enforcement gives businesses additional time to prepare to meet these reporting requirements should the injunction be lifted.

If You Have Already Filed BOI Reports:

– No immediate action is required, but we recommend taking the following steps:

– Pause Future Compliance Efforts: Unless future developments result in a lifting of the injunction, businesses that previously filed BOI reports do not need to continue any compliance efforts for now.

– Protect Your Information: Safeguard any data submitted to FinCEN to prevent misuse.

– Monitor Future Developments: Future legal appeals or administrative actions could reverse this decision.

– Consider consulting legal counsel: Obtaining legal counsel could be beneficial to determine how this decision impacts your specific situation.

What Happens Next?

– This injunction may be appealed, and the future of BOI reporting remains uncertain. It is critical to stay informed as the situation develops.

– As changes related to this occur over the next weeks, months, and years, we will continue to update you regarding the topic and will work to keep you up to date on the newest developments.

 

A Changing Landscape

This court decision highlights broader questions about the federal government’s role in corporate regulation and the potential for overreach. As Judge Mazzant noted, the CTA places significant burdens on small businesses while challenging the balance of federal and state powers.

Businesses should remain vigilant, as legal appeals or changes under a new administration could reinstate the BOI reporting requirement. The CTA was enacted in 2021, but with a new governmental administration coming in 2025 it is currently unclear what the future of these reporting requirements will be.

In the meantime, we are committed to keeping you informed and helping you navigate these evolving requirements.

 

For Further Information

If you have questions about how this impacts your business or need advice on what to do next, please do not hesitate to contact our team. Below is also a collection of articles that cover this topic if you would like more information about the subject:

– Court Blocks Corporate Transparency Act: A Win For Federalism? from Forbes

– Federal Court Enjoins Enforcement of the CTA Nationwide; Reporting Companies “Need Not Comply” with January 1 Deadline from National Law Review

–  Texas judge blocks anti-money laundering law’s enforcement nationwide from Reuters

–  Texas Top Cop Shop, Inc., et al. v. Garland, et al., Case No. 4:24-cv-478 (E.D. Tex.)