Department of Justice Files Emergency Motion to Stay the Nationwide Injunction Issued Against the Corporate Transparency Act (CTA) Affecting the Beneficial Ownership Information (BOI) Reporting Requirement

Edit on December 23, 2024:

The 5^th Circuit Court of Appeals ruled today in favor of the US Government and has lifted the nationwide injunction that was ordered by a US District Court in Texas on December 3^rd.  This means that January 1, 2025 remains the due date for initial filings of Beneficial Ownership Reports under the Corporate Transparency Act. 

FinCEN has not yet responded to this Appeals Court verdict, so we are unaware of any grace period or penalty relief that FinCEN will allow for the filings.  Businesses should be prepared to file the reports before the January 1^st due date.  We will keep you informed of any updates.

December 19, 2024:

In response to the December 3 issuance of a preliminary injunction by the U.S. District Court for the Eastern District of Texas that effectively blocked the U.S. Department of Treasury from enforcing the CTA’s beneficial ownership information reporting requirements, the Department of Justice filed an emergency motion for stay pending appeal with the Fifth Circuit on December 13.  If successful, the injunction would be lifted while the case is on appeal, effectively reinstating the CTA’s beneficial ownership information reporting requirements in the meantime.  The Department of Justice requested that the Fifth Circuit rule on its motion by December 27 so that entities are informed of their compliance obligation before the January 1, 2025 original deadline to complete the BOI reporting.  Alternatively, the Department of Justice has asked the Fifth Circuit to limit the injunction to only the plaintiffs in the case.  If the Fifth Circuit rules in favor of the Department of Justice by December 27, it is possible that the January 1, 2025, deadline will be implemented after all.  The BOI reporting requirement that became effective earlier this year requires entities organized both in the U.S. and out to disclose their beneficial ownership information to the Treasury Department’s Financial Crimes Enforcement Network. 

Keep in mind that there are potentially criminal and civil penalties for failure to report an entity’s BOI. Those penalties include both prison time and monetary penalties. If the BOI filing requirement is upheld, it is possible that the Treasury will enforce penalties for failure to make filings as initially required under the law. BMSS recommends that clients consult with their legal counsel on BOI reporting requirements and related filing obligations.