FinCEN Announces Compliance with CTA is Voluntary Following Nationwide Injunction
In response to the nationwide preliminary injunction temporarily blocking the enforcement of the Corporate Transparency Act’s (CTA) Beneficial Ownership Information (BOI) reporting requirements, FinCEN has announced that while the injunction is in place compliance with the CTA is only voluntary. On December 3, 2024, a federal district court in Texas issued a nationwide preliminary injunction in the case Texas Top Cop Shop, Inc., et al. v. Garland, et al., temporarily blocking the enforcement of the CTA BOI reporting requirements.
While it has appealed the December 3 order to the US Court of Appeals for the Fifth Circuit and the constitutionality of the CTA is still under review in several courts, FinCEN has announced that it will adhere to the injunction while it remains in effect. As such, reporting companies are not currently required to file BOI reports and will not face penalties for non-compliance during the duration of the injunction. However, reporting companies may continue to voluntarily submit BOI reports.
While each reporting company will need to decide whether it makes sense to voluntarily submit BOI reports under the CTA, it is clear that a reporting company choosing not to voluntarily submit will not face liability under the CTA while the preliminary injunction remains in place. It is important to note that injunction is preliminary and not permanent, and we believe further legal developments regarding the CTA will occur in the coming days and weeks. The Maynard Nexsen team will continue to monitor legal developments regarding the CTA, and we are here to answer your questions during this time of uncertainty.
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