Federal Court Halts BOI Reporting

A federal district court issued a preliminary injunction Dec. 3 prohibiting FinCEN from enforcing the Corporate Transparency Act (CTA) and the beneficial ownership information (BOI) reporting rule.

The injunction was issued in Texas Top Cop Shop, Inc. vs. Garland, No. 4:24-CV-478 (E.D. Texas 12/3/24). Under the national injunction, the CTA and the BOI reporting rule cannot be enforced. Reporting companies need not comply with the CTA’s Jan. 1, 2025, BOI reporting deadline pending a further order of the court.

A preliminary injunction in federal court is a court order issued at the early stages of a lawsuit to prevent a party from taking specified actions until the case is resolved. It remains in effect until the court issues a final decision, modifies the injunction, or overturns the decision on appeal.

The rule requires many companies to report information to the U.S. government about the individuals who ultimately own or control the company. In February, ALTA held a webinar that detailed which companies would need to comply with the reporting rule.

The Department of Justice, on behalf of the Treasury, filed a Notice of Appeal on Dec. 5. FinCEN issued a release following the court’s ruling indicating the agency will comply with the order issued by the U.S. District Court for the Eastern District of Texas for as long as it remains in effect. 

“Therefore, reporting companies are not currently required to file their beneficial ownership information with FinCEN and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect,” FinCEN said. “Nevertheless, reporting companies may continue to voluntarily submit beneficial ownership information reports.”

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