On December 3, 2024, a Texas federal court issued a nationwide injunction blocking the enforcement of the Corporate Transparency Act (CTA). This ruling effectively halts the reporting requirements for Beneficial Ownership Information (BOI) starting in 2025.   The ruling centers on the argument that the CTA oversteps the bounds of the Commerce Clause and the Necessary and Proper Clause of the U.S. Constitution.  

The key takeaways from the ruling are:

• Reporting Requirement Suspended: The court issued a stay of the CTA Reporting Rule’s January 1, 2025, BOI deadline while the injunction remains in place. Companies are not obligated to file their BOI with the Financial Crimes Enforcement Network (FinCEN) as mandated by the CTA.
• No Liability for Non-Compliance: Businesses will not face any penalties for failing to comply with the reporting requirements during the period the injunction is in effect.

What does this mean for businesses?

The legal battle surrounding the CTA is far from over, and businesses should remain vigilant. The government filed an appeal on December 6. The potential for the injunction to be overturned or modified remains a significant possibility. FinCEN has yet to indicate whether it will provide additional time for filing reports if the injunction is stayed or lifted.

The injunction does not prohibit companies from voluntarily filing BOI reports, and the FinCEN website is still accepting filings. A reporting entity may choose to complete and file its BOI reports to avoid uncertainty.

What comes next?

This situation is dynamic and subject to change, and it’s important to stay informed of developments in the legal proceedings related to the CTA. Your legal and financial professionals can help you understand the implications of this ruling for your specific business and develop a plan for potential future compliance requirements.