Financial Crimes Enforcement Network (FinCEN) Issues Clarification on Status of Corporate Transparency Act
December 12, 2024
The United States District Court for the Eastern District of Texas issued a nationwide preliminary injunction on December 3, 2024, blocking the federal government from enforcing the Corporate Transparency Act (“CTA”).
The ruling left many business owners wondering where they stand when it comes to the filing requirements. Though the preliminary injunction blocked enforcement of the CTA, clients now wonder if they should adhere to filing deadlines, given that the injunction is subject to appeal.
The Financial Crimes Enforcement Network (“FinCEN”) issued a statement addressing those concerns. It read, in part:
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.
While this litigation is ongoing, FinCEN will comply with the order issued by the U.S. District Court for the Eastern District of Texas for as long as it remains in effect.
An appeal and reversal of the preliminary injunction could come swiftly. Given that existing companies were previously required to file Beneficial Ownership Information Reports (“BOIR”) by December 31, 2024, if, hypothetically, an appeal was heard and the injunction was struck down in late December, the December 31 deadline to file could still be enforced.
Business owners are permitted to voluntarily file their reporting company’s BOIR through the FinCEN website as previously required. This filing would ensure compliance with the requirements of the CTA regardless of the results of pending lawsuits. Alternatively, a business owner may choose not to file a BOIR with FinCEN while we wait for the outcome of the above-described lawsuit. In this case, it may be seen as a bit of a roll of the dice. If a reporting company does not file a BOIR, it is imperative to closely monitor the situation and be prepared to file immediately should a ruling strike down the preliminary injunction. Failure to comply could leave a business exposed to civil penalties (including fines of more than $500 per day).
As always, we are here to answer any questions and assist you as you navigate these uncharted waters.
To read the full statement from FinCEN, click here
To read my previous alerts on the CTA click here and here
To be taken to the FinCEN page to file your BOI, click here
Carolyn Lavin DeVaughn is an Associate Attorney with Gross Shuman P.C. She concentrates her practice in the areas of corporate law, banking and finance, and estate planning. Carolyn works with businesses across a wide range of industries on all aspects of their business operations. She also works closely with clients on securing the funding to complete complex commercial real estate purchases, loans, and refinancing agreements. You can reach Carolyn at 716-854-4300 ext. 242 or [email protected]
