Client Alert: Corporate Transparency Act

December 9, 2024

As you are aware, in 2021, Congress passed the CTA (Corporate Transparency Act), which created a new beneficial ownership information reporting requirement for privately held companies created in or registered to do business in the U.S, referred to as “reporting companies.” For entities created prior to January 1, 2024, the deadline for this initial filing was set to be January 1, 2025.

On December 3, 2024, the US District Court for the Eastern District of Texas issued a decision in the matter of Top Cop Shop, Inc. et al. v. Garland which temporarily enjoined the US government from enforcing regulations promulgated under the CTA. In his decision, the Judge stated that:

  • The CTA is likely unconstitutional as outside of Congress’ power;
  • Enforcement of the reporting rule is enjoined, and the compliance deadline of January 1, 2025 is stayed; and
  • Reporting companies need not comply with the CTA’s January 1, 2025 deadline pending further order of the Court.

The government is likely to file an appeal within the next sixty (60) days. The result of that appeal may be the lifting or narrowing of the injunction. In the meantime, FinCEN has issued an Alert related to the decision, with the following instructions:

“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.”

– Beneficial Ownership Information Reporting | FinCEN.gov

It is important that if you have not completed the BOI reporting for a reporting company, that you continue to gather the inform necessary to complete the filing so that you can either (1) submit a voluntary filing now, or (2) be prepared to file promptly should the injunction be modified or removed. This will ensure your compliance.

For filing information regarding these updates, read more in Client Alert: Commonwealth Trust Company CTA Filing Information.

Commonwealth Trust Company is pleased to provide this article as a guide. Commonwealth Trust Company is not engaged in the practice of law and is not providing legal advice by the provision of these materials. Commonwealth Trust Company recommends that clients seek the opinion of their attorney regarding the specific legal and tax issues addressed in this article.