On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction temporarily halting the enforcement of certain reporting requirements under the Corporate Transparency Act (CTA). While this decision prevents the Financial Crimes Enforcement Network (FinCEN) from enforcing the filing of Beneficial Ownership Information Reports (BOIRs), effectively delaying compliance obligations for entities previously subject to the CTA’s year-end deadline, this is not a final ruling. FinCEN continues to believe the CTA is, in fact, constitutional, despite one district court judge’s decision and remains focused on elevating the reporting standards to prevent financial crimes.
The Department of Justice (DOJ) is expected to appeal the decision, as seen in a similar case earlier this year (Northern District of Alabama), currently being reviewed in the 11th Circuit Court of Appeals. If overturned, the CTA’s reporting requirements will be reinstated.
Notably, other federal courts, including those in Oregon and Virginia, have upheld the CTA’s constitutionality, further supporting the likelihood of a DOJ appeal. Despite the preliminary injunction, FinCEN continues to accept BOIR filings as of December 4, 2024, and maintains its stance—consistent with other federal court decisions—that the CTA is lawful and constitutional.
The CTA aims to enhance financial transparency and combat illicit activities by requiring certain entities to disclose their beneficial ownership. Businesses affected by the CTA are encouraged to monitor developments closely and remain prepared for potential changes in enforcement.
At FileForms, we are committed to keeping our clients and partners informed on federal and state compliance and reporting requirements. We will continue to offer our filing services to clients who wish to proactively complete their info disclosure with FinCEN, acknowledging the current injunction and associated legal uncertainty. Specifically, companies who were formed in 2024 and beyond should consider filing their BOI report as it is unclear if they are covered by the nationwide preliminary injunction. Taking steps to file now, which can take less than 10 minutes, may help avoid potential penalties if or when CTA enforcement is reinstated.
We understand that yesterday’s ruling is one of several ongoing cases, with appellate decisions expected in the coming months, and plenty of other misinformation and confusion surrounding the implementation of the CTA. For further information about the litigation, we recommend consulting your legal counsel or reaching out directly to the DOJ, who will be making a formal public statement in short order. We anticipate additional updates from FinCEN and the federal government soon and will share new developments promptly.
If you have any questions or would like assistance with your filings, please do not hesitate to contact us.
