BREAKING [UPDATE]: BOI reporting requirements paused again

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On December 26, 2024, a mere three days after the U.S. Court of Appeals for the Fifth Circuit lifted an injunction staying enforcement of FinCEN’s beneficial ownership information reporting requirement, the same court has now reversed itself, reinstating the injunction and giving businesses an indefinite reprieve from the filing requirement. In effect, 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.

What has happened?

On Tuesday, December 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.), the U.S. District Court for the Eastern District of Texas, Sherman Division, issued an order granting a nationwide preliminary injunction. Texas Top Cop Shop is only one of several cases that have challenged the Corporate Transparency Act (CTA) pending before courts around the country. Several district courts have denied requests to enjoin the CTA, ruling in favor of the Department of the Treasury. The government continues to believe—consistent with the conclusions of the U.S. District Courts for the Eastern District of Virginia and the District of Oregon—that the CTA is constitutional. For that reason, the Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024 and separately sought of stay of the injunction pending that appeal.

On December 23, 2024, a panel of the U.S. Court of Appeals for the Fifth Circuit granted a stay of the district court’s preliminary injunction entered in the case of Texas Top Cop Shop, Inc. v. Garland, pending the outcome of the Department of the Treasury’s ongoing appeal of the district court’s order. FinCEN immediately issued an alert notifying the public of this ruling, and recognizing that reporting companies may have needed additional time to comply with beneficial ownership reporting requirements, FinCEN extended reporting deadlines. On December 26, 2024, however, a different panel of the U.S. Court of Appeals for the Fifth Circuit issued an order vacating the Court’s December 23, 2024 order granting a stay of the preliminary injunction. Accordingly, as of December 26, 2024, the injunction issued by the district court in Texas Top Cop Shop, Inc. v. Garland now remains is in effect and reporting companies are not currently required to file beneficial ownership information with FinCEN.

What does this mean?

  • An injunction has been reinstated and therefor reporting at this point is voluntary once again.
  • Reversal at this point would require a contrary en banc order from the Fifth Circuit or a decision by the U.S. Supreme Court so we may not see the current injunction lifted anytime soon. That being said, companies should consider continuing their efforts to prepare e preparing documentation for potential filing should the filing requirement be reinstated.
  • Stay alert to any legal updates regarding this matter.