The holidays may have come early for millions of businesses throughout the United States. Back in December 2023, we reported on the requirements under the Corporate Transparency Act (CTA). Unless a legal entity created in or registered to do business in the United States can satisfy one of the few and relatively narrow exemptions from reporting its beneficial ownership information (BOI) to the U.S. Department of the Treasury Financial Crimes Enforcement Network (FinCEN), the legal entity as a reporting company created before January 1, 2024, had until January 1, 2025, to file its BOI report with FinCEN. Reporting companies created on or after January 1, 2024, and before January 1, 2025, had ninety days after creation or registration to file. We have in fact been filing these BOI reports for many clients since the report is required under the CTA and the BOI reporting rule that FinCEN issued thereunder. Failure to timely file, amend, or correct a BOI report with FinCEN subjects the reporting company to potential civil, and in some cases criminal, penalties from FinCEN.

On December 3, 2024, U.S. District Judge Amos Mazzant from the Eastern District of Texas turned the CTA and the FinCEN BOI Reporting Rule on their heads, ruling that:

1. "the CTA, 31 U.S.C. § 5336, is … enjoined";
2. "[e]nforcement of the [BOI] Reporting Rule, 31 C.F.R. 1010.380 is also … enjoined";
3. "the compliance deadline is stayed ….";
4. "[n]either [the CTA nor the BOI Reporting Rule] may be enforced"; and
5. "reporting companies need not comply with the CTA's January 1, 2025, BOI reporting deadline pending further order of the Court."

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