CTA COMPLIANCE ALERT – January 27, 2025
Despite the US Supreme Court overturning on Thursday January 23rd the nationwide preliminary injunction initially granted by one Texas Federal District Court Judge and affirmed by the Fifth Circuit Court of Appeals, enforcement of the Corporate Transparency Act (“CTA”) remains enjoined, Beneficial Ownership Information (“BOI”) reporting remains voluntary, and no fines or penalties will be issued for not reporting at this time. Earlier this month, a second judge in the same Texas Federal District Court (Eastern District) had issued a second nationwide preliminary injunction against enforcement of the CTA. That second injunction remains in full force and effect until further court action.
On January 24th, FinCEN updated its website and affirmed the current voluntary reporting status indicating – “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” [emphasis added].
Based upon various reports, ongoing judicial and congressional activity may change the CTA landscape. Discussed activity includes –
- Some US Supreme Court Justices prefer to proactively address the authority of Federal District courts to issue nationwide injunctions. This issue could be addressed upon petition for writ of certiorari, but the case would not address the underlying constitutional issues with the CTA.
- Several federal courts across the country have addressed actions questioning the constitutionality of the CTA with several differing outcomes and rationales. Given the significant split among the Federal Circuits relative to the constitutionality of the CTA, some expect the Supreme Court to take up the dispute fully. In that regard a case from the Federal District Court of Alabama (Northern District) and the Eleventh Circuit is furthest along the procedural spectrum to reach the High Court.
- Finally, based upon Congressional discussions and developing legislation, some expect Congress to act before the courts decide the issue. This may include repeal of amendment to the CTA and notably the BOI reporting requirement.
For the time-being, compliance with the CTA remains enjoined and BOI reporting is only voluntary. Many are taking a “wait and see” approach, while others are voluntarily reporting avoid the chaos if the injunction is stayed/lifted or the CTA is found constitutional. Stay tuned as the status of the CTA is getting wide publicity given its broad impact and compliance requirements. Visit FinCEN’s website: https://fincen.gov/boi for their latest BOI Alerts and updates, or contact your attorney at Devine Millimet.
