In the closing weeks of 2024, the Corporate Transparency Act (the CTA) has been making its way through the federal legal system creating a confusing on again-off again scenario. (Read more at The National Law Review) On December 31, 2024, the U.S. Solicitor General went to the Supreme Court and filed an Application for a Stay of the Injunction issued by the United States District Court for the Eastern District of Texas (Application) in the case of Texas Top Cop Shop, et al. v. Garland, et al., appealing the initial nationwide injunction issued by the District Court against enforcement of the Corporate Transparency Act (CTA) and the ensuing conflicting appellate rulings by and within the U.S. Fifth Circuit Court of Appeals’ “motions panel” and “merits panel.”
What this means is the the future of the CTA still not resolved.
According to FinCEN on January 2, 2025, “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.” SOURCE
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The Application’s filing has no immediate impact on the existing nationwide injunction against government enforcement of the CTA, and, at present, all filings of beneficial ownership information reports (BOIRs) with FinCEN under the CTA remain voluntary. The U.S. Supreme Court is not obliged to answer the Application, however, it may determine to take on some or all of the issues presented in the Application on a discretionary basis and on the court’s timeline.
The CTA is a U.S. law designed to increase transparency in business ownership by requiring certain companies to submit detailed information about their beneficial owners to the government, primarily aimed at combating money laundering, terrorist financing, and other illicit activities; it went into effect on January 1, 2024. Due to the legal developments, the filing deadline for eligible businesses was extended by FinCEN to January 13, 2025. Those who fail to file by this deadline — or fail to update this information if needed — could face up to two years imprisonment and fines up to $10,000, in addition to civil penalties of up to $591 per day.
EDITORS NOTE: January 3, 2025
The FinCEN website outlines what type of organizations are required to file OR exempt under the CTA.
If your company is not exempt and has not yet filed its beneficial ownership information reports (BOIRs) with FinCEN under the CTA, you can still do so voluntarily, or wait for the final outcome from the courts. Your legal advisors are a great resource as you determine the best path for your company.