BOI Reporting Blocked by Preliminary Injunction

CTA Blocked Nationwide by Texas Court

December 4, 2024 – As the January 1, 2025 deadline for businesses to report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) nears, a federal judge in Texas has issued a preliminary injunction blocking enforcement of the requirement. The order states that covered companies nationwide do not need to comply with the January 1st reporting deadline, unless a higher court reverses the order.

The lawsuit was brought by the National Federation of Independent Business (NFIB) and several of its members, and it challenged the constitutionality of the Corporate Transparency Act (CTA). The CTA is the 2021 bill that established a beneficial ownership information (BOI) registry and the requirement for businesses to report. The plaintiffs argued that the CTA exceeded Congress’s authority to regulate interstate commerce, that it violates the First Amendment by compelling speech and infringing freedom of association, and that it violates the Fourth Amendment by forcing the disclosure of private information.

Data has shown that many businesses that are subject to these reporting rules have yet to file their reports – only about a quarter of the estimated 32.5 million covered businesses had filed their reports by mid-November.

What does this mean for you and your business?

If you have any business entities that may have a BOI filing requirement under these rules, the preliminary injunction means that you are currently not required to comply with the reported deadline of January 1, 2025. If you have already filed your report, there should be no further action required. If you have not yet filed, you can consider whether to go ahead and file anyway or choose not to file.

Keep in mind, because this is a preliminary injunction, there is the risk of a higher court overruling the decision in the coming weeks, which could leave businesses with a short window of time to become compliant.

Next Steps

We encourage you to visit with your legal counsel to determine the best course of action on filings that you have not yet completed, and to keep up to date on any future changes to the injunction. With less than a month before that January deadline, it is important to stay up to date on the latest developments on CTA enforceability.