With the January 1, 2025, BOI reporting deadline due date for reporting companies in existence prior to January 1, 2024, quickly approaching everything Corporate Transparency Act (CTA) related has come to a screeching halt. On December 3, a Texas federal district court issued a preliminary injunction prohibiting the federal government from enforcing the CTA nationwide on the grounds that the CTA is unconstitutional, and that Congress is overstepping their authority.   This injunction stated that the CTA and its regulations cannot be enforced and that the “reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline.”

This Texas district court in its ruling said that “The Court has determined that the CTA and Reporting Rule are likely unconstitutional for purposes of a preliminary injunction.”  There will be further litigation on this matter as the United States Government will sure challenge this ruling.  In fact, The Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024.

The official position from FinCEN is that it maintains that the CTA is constitutional but “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.” This protection remains in place only as long as the Texas federal court injunction is in effect.

If you have already filed the beneficial ownership information report then you do not have to worry about the injunction and the January 1, 2025, deadline being postponed.  If you have not filed the beneficial ownership information report as of yet then you might want to consult with your form preparer to determine if voluntarily filing prior to the original January 1, 2025 is recommended, as it is uncertain when the injunction will be lifted and when the new due date will be.

If you have any questions or if you would like to discuss any of this further, please do not hesitate to consult with a tax professional at Dermody, Burke, and Brown, CPAs, LLC.