BOI Reporting Paused and CTA Enforcement in Question

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CTA requires BOI report

BOI Filing Halted While Constitutionality is Disputed

The saga of the Corporate Transparency Act and its beneficial ownership information reporting requirement continues. On December 3, 2024, the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction prohibiting the federal government from enforcing the Corporate Transparency Act (CTA) and its beneficial ownership information (BOI) reporting requirement. The injunction applies against enforcement of the CTA and its Jan. 1, 2025, filing deadline. The Department of Justice appealed the injunction two days later 4.

Just to recap, on Jan. 1, 2024, the CTA imposed a requirement to file beneficial ownership information with the Treasury’s Financial Crimes Enforcement Network, or FinCEN. Existing companies were required to file within the year 2024, while a new company started during the year would have 30 days to file. It was estimated there would be 32.6 million filings in 2024 and between 5 and 6 million each year thereafter. The penalty for failure to comply is a $500 per day penalty, capped at $10,000.

As of right now, there is no obligation or duty to file. Our current recommendation to clients is to pause from any filing that they otherwise might make, but that they should continue to assemble the information so that they are ready to file. The reality is that the Texas district court did not decide that the CTA was unconstitutional, they merely said that it was ‘likely’ to be found to be unconstitutional.

Given the fact there are a number of cases before different courts around the country seeking to overturn the CTA on constitutional grounds, the question may eventually go before the Supreme Court.

Feel free to contact us with any questions, (312) 578-9300 or info@madonia.com.