FinCEN responds to December 3, 2024, Federal Court Order Regarding the Corporate Transparency Act and the Beneficial Owners Information Reporting
On December 6, 2024, FinCEN responded to a nationwide preliminary injunction issued by the U.S. District Court for the Eastern District of Texas. The injunction temporarily blocks enforcement of the Corporate Transparency Act (CTA), specifically the Beneficial Ownership Information (BOI) reporting requirements. In its response, FinCEN acknowledged the Court’s decision and confirmed that it will adhere to the order by temporarily suspending enforcement of the reporting requirements nationwide. However, reporting companies may continue to voluntarily submit BOI Reports.
FinCEN reiterated its support for the CTA’s goals of combating financial crimes and noted that, on December 5, 2024, the Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal with the Fifth Circuit of Appeals. The DOJ is promptly seeking a stay of the nationwide injunction while the appeal is under review. The Fifth Circuit could quickly revise the scope of the injunction prior to the regulation's January 1, 2025, deadline. If the Fifth Circuit does revise the scope, it could potentially limit the injunction's application to the named plaintiffs or stay the entire injunction, which would allow FinCEN to enforce the Corporate Transparency Act nationwide once again.
At this time, it is unknown how the incoming Trump administration views the Texas court order, or the appeal filed by the DOJ, as the administration has not yet commented or signaled how they may act.
What we are recommending:
Given the uncertainty surrounding whether and when a stay might be granted, or how the Trump administration may respond, we continue to recommend that companies assess their BOI reporting obligations and either voluntarily file their BOI report or at a minimum be ready to report and be in compliance with the CTA requirements should the injunction be lifted or revised.
We will continue to closely monitor the situation and will provide updates as new information becomes available. Please reach out to BeneficialOwnerIR@cpabr.com with any questions or for assistance.