Important Update Regarding Nationwide Preliminary Injunction
On December 3, 2024, in the case of Texas Top Cop Shop v. Garland, et. al, Judge Mazzant of the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction enjoining the U.S. Department of the Treasury from enforcing the Corporate Transparency Act (the “CTA”) and its related regulations. The Court also ruled that reporting companies need not comply with the CTA’s January 1, 2025 deadline for filing beneficial ownership reports.
Because the Court’s order is a preliminary injunction and not a final decision, it only temporarily pauses enforcement of the CTA. If the Court’s order is overturned on appeal, or if the Government ultimately prevails on the merits, then enforcement of the CTA could resume.
Notwithstanding the preliminary injunction, FinCEN will continue to accept beneficial ownership information reports, and you may desire to file reports for your entities while awaiting a final resolution of this case. To be clear, we are not advising you to proceed with reporting or refrain from reporting based on the Court’s preliminary injunction. We encourage you to stay posted on further developments on this case (and the status of the preliminary injunction).
The CTA went into effect on January 1, 2024. The purpose of the CTA is to facilitate enforcement of anti-money-laundering laws, but it affects millions of ordinary Americans who own interest in small businesses.
Unless an exemption applies, the CTA requires all entities, including corporations, limited partnerships and limited liability companies, that are created by filing a document with a state's secretary of state or other state agency (the Division of Corporations in Utah) to disclose to the federal government in a Beneficial Ownership Information Report (“BOI Report”) the identity, date of birth, residential address, and a copy of a government-issued photo ID for each of their beneficial owners and company applicants. The CTA defines a beneficial owner as someone who owns or controls at least 25% of the reporting company or who exercises “substantial control” over the entity. A company applicant is an individual who directly files or is primarily responsible for the filing of the document that creates or registers an entity. The BOI Report is filed with the Financial Crimes Enforcement Network (“FinCEN”), which is a bureau of the Treasury Department.
There are two dates to be aware of for purposes of complying with the CTA: (i) any reporting company that was created during 2024 must file its BOI Report within 90 days after creation and (ii) any reporting company that existed prior to January 1, 2024 must file its BOI Report no later than January 1, 2025.
In addition, beginning January 1, 2024, changes to any information previously provided to FinCEN must be reported within 30 days of the change. There are stiff penalties for willfully failing to comply with the CTA’s reporting requirements, including civil fines of up to $10,000 and possible criminal prosecution.
FinCEN designed its reporting interface so that reporting companies would be able to file BOI Reports on their own. Nevertheless, you may choose to engage BTJD to assist you with your reporting obligations under the CTA, including identifying reporting companies and beneficial owners. However, please be aware that our ability to assist clients with their filing obligations will become more and more limited as the end of the year approaches.
NOTE: This page provides only an informational summary of the CTA and should not be relied on as legal advice or a full scope of your obligations under the CTA. For more information, please refer to FinCEN's website, which may be accessed via the Resources & Guidance section below.
To file a BOI Report for a reporting company or for information on how to file a BOI Report, click the "File with FinCEN" button below. This button will take you directly to FinCEN's website.
Click the button below to watch a 5-minute step-by-step demonstration video on how to file a BOI Report online through FinCEN's website.
While it's not required, beneficial owners and company applicants may obtain a FinCEN identifier which can be included in the BOI Report in place of the party's personal information. Click the button below to obtain a FinCEN identifier directly through FinCEN's website.
There are 23 types of entities that are exempt from filing a BOI Report. Click the "Learn More" button below for a list of these exempt entities.
For more information about the reporting requirements under the Act, please refer to FinCEN's FAQs page or contact a BTJD attorney.