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Should I Stay or Should I Go? Reporting Companies Are (Again) Not Required to Comply with the CTA
Friday, December 27, 2024

Here’s a brief recap of the CTA drama to date:

  • On December 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., the U.S. District Court for the Eastern District of Texas found the Corporate Transparency Act unconstitutional and issued an order granting a nationwide preliminary injunction against the CTA, which meant that reporting companies were not required to comply with the CTA while the temporary injunction was in place.
  • FinCEN responded with an alert acknowledging that reporting companies were not required to file while the temporary injunction was in place, but FinCEN would still accept voluntary submissions.
  • On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit granted a stay of the district court’s preliminary injunction, which meant that the CTA was back in effect and reporting companies were again required to comply with the CTA’s BOI reporting requirements.
  • FinCEN then issued an alert that extended the January 1, 2025, BOI initial reporting deadline until January 13, 2025, and provided additional guidance with respect to the timing of certain reports for reporting companies formed or registered this year.
  • Late on December 26, 2024, the U.S. Court of Appeals for the Fifth Circuit lifted the stay on the preliminary injunction, meaning that reporting companies are (again) not required to comply with the CTA while the injunction is in place.

We realize that this has been a frustrating experience for many of our clients, and we appreciate that you want to return to the business of building your businesses, rather than wondering if or when the CTA dispute will be finally resolved.

Based on the upcoming briefing schedule for this lawsuit, we do not think it is likely that the injunction will be stayed or lifted again in the coming weeks.

Based on the foregoing information, our guidance at this time differs slightly from our previous guidance:

  • To the extent voluntary compliance with the CTA at this time does not place an undue burden on your business and you’d like to have one less thing to worry about in the new year, we suggest that you file your BOI report as soon as you are able.
  • If you have not submitted your BOI report, but believe that there is a good chance the courts will find the CTA unconstitutional and therefore no BOI reporting will be required, we nevertheless suggest you continue to gather your BOI and be prepared to file promptly in the event the courts ultimately determine that the CTA is constitutional and Congress does not step in and delay the effective date or perhaps repeal or substantially limit the law.
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