On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction precluding the enforcement of the Corporate Transparency Act1 (CTA). The CTA requires domestic and foreign entities created by filing with a secretary of state or foreign entities registered to do business with a secretary of state (i.e., corporations, LLCs, and limited partnerships) to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). The U.S. Department of Justice promptly filed a notice of appeal of this injunction.
The injunction is preliminary, not permanent, and puts the future of the CTA in flux. FinCEN announced that while the injunction is in place, companies that do not file their beneficial ownership information reports will not be subject to liability. FinCEN will continue accepting voluntarily filed beneficial ownership reports.
Under the CTA, entities in existence before January 1, 2024, have until December 31, 2024, to submit their beneficial ownership information reports. Entities formed after January 1, 2024, are required to file beneficial ownership information reports within 90 days of formation, and entities formed after January 1, 2025, are required to file beneficial ownership information reports within 30 days of formation.
We recommend clients continue to timely file their beneficial ownership information reports if they are able. Clients that do not wish to file while the injunction is in place should collect the necessary beneficial ownership information and be prepared to file on short notice in the event the injunction is lifted.
Footnote
1. Texas Top Cop Shop, Inc., et al. v. Garland, et al
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