Corporate Transparency Act Update
December 26, 2024
Client Notice:
The Corporate Transparency Act (CTA), which went into effect January 1, 2024, requires “reporting companies” in the United States to disclose information about their beneficial owners — the individuals who ultimately own or control a company — to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) by filing a Beneficial Ownership Information Report (“BOIR”).
On December 3, 2024, the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction that enjoins the federal government from enforcing the CTA. This court ordered that neither the CTA nor the implementing rules adopted by FinCEN may be enforced and that reporting companies need not comply with the CTA’s January 1, 2025 deadline for filing BOIRs.
On December 23, 2024, the Fifth Circuit Court of Appeals stayed the preliminary injunction previously issued by the Texas federal court. This means that reporting companies are once again required to file BOIRs with FinCEN. FinCEN has since issued an alert notifying reporting companies that the BOIR reporting requirement has been reinstated and extended the deadline to file a BOIR until January 13, 2025. (Additional deadline information can be found below.)
- Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial BOIR with FinCEN.
- Reporting companies created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial BOIR with FinCEN.
- Reporting companies created or registered in the United States on or after December 3, 2024 through December 23, 2024 have an additional 21 days from their original filing deadline to file their initial BOIR with FinCEN.
- Reporting companies that are created or registered in the United States on or after January 1, 2025 have 30 days to file their initial BOIR with FinCEN after receiving actual or public notice that their creation or registration is effective.
Despite the fact the injunction has been stayed, the Fifth Circuit has yet to rule on the underlying issue of the CTA’s constitutionality. That said, regardless of whether the CTA is ultimately held to be unconstitutional, by lifting the injunction the court is forcing reporting companies to file BOIRs while the judicial process unfolds.
There is still uncertainty for reporting companies because of appeals, the pending change in administrations in Washington DC. and other reasons. To provide clarity to the reporting companies Riezman Berger represents, we are advising our clients to timely file their BOIRs on or before the dates stated above.
Reporting companies should take note that failure to timely file a BOIR can result in significant penalties (including civil and criminal penalties), so it is critical that reporting companies satisfy their reporting obligations under the CTA.
Based on these new developments, Riezman Berger will proceed on filing BOIRs for reporting companies for which we have been engaged to do so and for which we have all necessary information. Please contact your Riezman Berger attorney as soon as possible if you wish to engage Riezman Berger to file a BOIR.
Please note that Riezman Berger does not provide advice as to the application of these laws to an entity unless we have been expressly engaged to provide such advice.
We will continue to monitor developments in the Texas case. If you have any questions, please contact your Riezman Berger attorney or Riezman Berger generally at 314-727-0101.