UPDATE: FinCEN Responds to Nationwide Preliminary Injunction of CTA Enforcement

As we shared in our client alert last week, on December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction in Texas Top Cop Shop, Inc., et al. v. Garland, et al., temporarily halting enforcement of the Corporate Transparency Act (“CTA”) and its beneficial ownership information (“BOI”) reporting requirements.

In response, FinCEN announced it will comply with the Court’s order for as long as it remains in effect, noting that during this time reporting companies are not currently required to file BOI reports and will not face penalties for failing to report while the injunction remains in effect. Voluntary submissions, however, are still permitted.

For more details, you can view FinCEN’s full alert here.

What This Means for You

• No Immediate Filing Requirement: The preliminary injunction stays all BOI reporting requirement deadlines for now. Reporting companies are momentarily relieved of reporting obligations.
• Litigation Ongoing: As expected, the Department of Justice filed a Notice of Appeal on behalf of the Department of the Treasury, signaling the government’s intent to challenge the court’s decision. The ultimate status of the injunction and the CTA remains uncertain, pending further court rulings or guidance.
• Preparation Still Recommended: While filing is currently paused, reporting companies should nevertheless continue assessing their BOI reporting requirements and gathering necessary information to ensure readiness if the injunction is lifted. FinCEN has not yet provided guidance on how much time reporting companies will be granted to file their BOI reports if the Texas District Court’s injunction is lifted and how quickly enforcement of the CTA would resume.

Next Steps

We advise clients to monitor this matter closely and maintain preparation for potential filing requirements. Our team is actively tracking developments and will provide updates as the matter evolves. To read more on the recent CTA preliminary injunction in Texas Top Cop Shop, Inc., et al. v. Garland, et al., visit here: https://www.baileyglasser.com/news-Alert-Nationwide-Injunction-Halts-Corporate-Transparency-Act-Enforcement 

If you have specific questions or need assistance with your compliance strategy, please do not hesitate to contact the BG CTA Team:

Lorren Patterson – lpatterson@baileyglasser.com 

Paul-Kalvin Collins – pcollins@baileyglasser.com

Japera Parker – jparker@baileyglasser.com