An interim nationwide injunction was issued by the U.S. District Court for the Eastern District of Texas (the “Court”) on December 3rd, temporarily barring enforcement of the Corporate Transparency Act (the “CTA”) and the associated beneficial ownership information reporting rules (the “BOI Rules”). The Court’s order also stayed the January 1, 2025 compliance deadline.
New Developments
Following the client update we sent out last Thursday, on Friday, December 6th, the U.S. government appealed the temporary injunction to the U.S. Court of Appeals for the Fifth Circuit (the “Appellate Court”) and asked the Appellate Court to stay (freeze) the interim injunction. Reporting Companies should consider the possibility that the Appellate Court could amend or overturn the interim injunction before the end of the year, in which case pre-2024 Reporting Companies may be required to file their initial BOI Reports by January 1, 2025.
Reporting Companies’ Next Steps
While the Court’s preliminary injunction currently releases Reporting Companies from the requirement to file BOI Reports, that requirement could be reinstated at any time by the Appellate Court. Therefore, Reporting Companies should continue preparing to meet their applicable BOI reporting deadlines, including collecting all information and documents required for BOI reports.
A stay or reversal of the Court’s interim injunction would reinstate the reporting requirements under the CTA and BOI Rules and Reporting Companies cannot rely on an extension of the reporting deadlines if that were to occur. Therefore, Reporting Companies that want to be sure of their compliance with CTA should either proceed with filing their BOI reports before the applicable deadlines or be prepared file immediately if the circumstances make it necessary to do so.
This update is intended to bring CTA developments to your attention and is provided for informational purposes only and does not serve to replace professional legal advice. This is a summary only, and we are at your disposal should you wish to consult with us for legal advice before taking action.
