An Update to BOI Reporting

On December 3, 2024, a Texas federal court issued a significant ruling that halts the enforcement of the Corporate Transparency Act (CTA) nationwide. The CTA, which was enacted in 2021 as part of the National Defense Authorization Act, aimed to increase transparency regarding the "beneficial owners" (BOI) of companies in the U.S. The law would have required approximately 32.5 million companies to disclose sensitive ownership information to the Financial Crimes Enforcement Network (FinCEN) by January 1, 2025.

The Texas federal court ruled that the CTA's enforcement is likely unconstitutional and would cause irreparable harm to businesses. The Court stated that the requirement for companies to report detailed information on their beneficial owners to the federal government violates constitutional protections and presents a dangerous expansion of federal power.

As a result of the court’s decision, the federal government is now prohibited from enforcing the CTA nationwide. This means that companies do not have to comply with the CTA’s deadline of January 1, 2025, to submit their BOI to FinCEN. The court’s injunction is temporary, pending further legal proceedings, and the future of the CTA’s enforcement remains uncertain. For now, businesses impacted by the CTA can refrain from submitting the required beneficial ownership information to FinCEN, but they should continue to stay informed about any developments or future court decisions that may impact the law's enforcement.

This information is provided for informational purposes only and is not intended to constitute legal advice. Please consult your attorney for guidance specific to your situation.