Alert
Corporate Transparency Act— Nationwide Injunction Update and Key Considerations
December 11, 2024
Authors
Mark M. Christopher
Director, Boston
mchristopher@goulstonstorrs.com+1 617 574 3513
Vaishali Goyal
Associate, Boston
vgoyal@goulstonstorrs.com+1 617 574 2242
Gary M. Ronan
Director, Boston
gronan@goulstonstorrs.com+1 617 574 3593On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide injunction halting enforcement of the Corporate Transparency Act (“CTA”).1 In response, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) confirmed it will comply with the injunction while also appealing the decision. FinCEN also states on its website that reporting companies are not required to file beneficial ownership information during the injunction and will not incur penalties for failing to do so.
For so long as the injunction remains in place, it is safe not to make CTA filings. On the other hand, it is impossible to know whether and when the injunction may be lifted. And if it is lifted, there may be limited time for filings to be made before penalties accrue. Filers who choose not to file now may wish to assemble their information so they are ready to file on short notice should the need arise. We also recommend that filers who do not have particular privacy or other concerns consider filing notwithstanding the injunction to ensure that they are compliant no matter the outcome of the lawsuit.2 Ultimately, the decision to file is a personal and business decision that will vary by client.
Below are key points to consider:
If you have already applied for a FinCEN Identifier, your sensitive information is already submitted, so there is less risk in proceeding with the filing.
If privacy and business concerns are minimal, consider filing now to avoid a potential rush if the injunction is lifted and filings become due immediately.
For entities formed in 2024 with a non-12/31 filing deadline, consider filing if privacy is less of a concern. Although FinCEN may provide an extension in these situations, penalties remain steep and the outcome is uncertain.
Clients unsure about how to proceed should reach out to their Goulston & Storrs attorney for additional guidance.
See Texas Top Cop Shop, Inc., et al. v. Merrick Garland, et al (https://perspectives.goulstonstorrs.com/post/102jr07/cta-v-garland-district-court-opinion-preliminary-injunction.pdf).
We previously published some advisories on the general application of the CTA (https://perspectives.goulstonstorrs.com/post/102iuzk/understanding-the-corporate-transparency-act-and-ensuring-compliance) and its specific application for those with entities for estate planning purposes (https://perspectives.goulstonstorrs.com/post/102iuv0/a-guide-to-the-corporate-transparency-act-for-individuals-with-closely-held-busin) and the rules and guidelines are largely unchanged.
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