On December 3, 2024, a federal district court in the case of Texas Top Cop Shop, Inc. v. Garland, No. 4:24-CV-478, entered an order enjoining enforcement of the Corporate Transparency Act (“CTA”) and its corresponding reporting rule.
The Government appealed, and on December 23, 2024, a motions panel of the U.S. Court of Appeals for the Fifth Circuit granted the Government’s emergency motion for a stay pending appeal.
On December 26, 2024, the Fifth Circuit vacated the stay that had been issued by the motions panel that had lifted the preliminary nationwide injunction. As a result, the CTA’s beneficial ownership information (“BOI”) reporting requirements are back to being voluntary, pending the appeal, which the court confirmed remains expedited.
In response, FinCEN has added the following alert on its website:
In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.
Despite the injunction, reporting companies are permitted to continue to voluntarily submit beneficial ownership information reports, and individuals are permitted to voluntarily obtain FinCEN identifier numbers and file with FinCEN updated or corrected information in applications for FinCEN identifier numbers.
Though the timeframe for the Fifth Circuit’s consideration of the issues and an eventual final decision regarding the disposition of the CTA is uncertain, reporting companies should continue to monitor proceedings in the litigation and further guidance issued by FinCEN.
If you have questions regarding the CTA and the reporting requirements, please contact Joshua B. Beisker at 585-258-2879 or jbeisker@underbergkessler.com.
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