December 26, 2024 Update:

There has been yet another court decision surrounding the Corporate Transparency Act (“CTA”) and its impending deadlines.
 
Recently, we sent you communication regarding the Financial Crimes Enforcement Network’s (“FinCEN”) January 13, 2025 extension to file beneficial ownership information (BOI) reports for most reporting companies.
 
In the latest development, it appears that reporting companies may once again be relieved of their BOI reporting obligations.

Here’s what happened:

• On December 13, 2024, the U.S. Department of Justice (DOJ) filed an emergency motion with the U.S. Court of Appeals for the Fifth Circuit to stay, or put on hold, the nationwide temporary preliminary injunction that halted all required filings pursuant to the Corporate Transparency Act (CTA) on December 3, 2024.
• On December 23, 2024, the Fifth Circuit granted the DOJ’s motion for a stay of the preliminary injunction.
• FinCEN, which enforces the CTA, extended the deadline for most reporting companies to file beneficial ownership information (BOI) reports to January 13, 2025.

Here’s the latest news:

• On December 26, 2024, the Fifth Circuit vacated the stay (hold) and again halted the enforcement of the CTA nationwide.
• As a result of the above order, reporting companies are once more relieved of their BOI reporting obligations and FinCEN’s reporting deadlines are no longer enforceable (for the moment).
• We’re still awaiting a statement from FinCEN.
• The court’s latest decision reinstates the nationwide CTA injunction, blocking the BOI reporting requirements for reporting entities while the court fully considers the government’s appeal.

Here’s what you need to know:

• As of right now, the BOI reporting requirements cannot be enforced by FinCEN.
• FinCEN has not yet issued a statement, but it is anticipated that it will comply with the injunction while continuing to allow businesses to voluntarily submit BOI reports.
• While this injunction remains in effect, there is no requirement for reporting entities to comply with the CTA, including the upcoming January 1, 2025 deadline (and subsequent January 13, 2025 extension) for filing beneficial ownership reports for existing entities, as well as any additional filings previously required for new entities formed during 2024 or 2025.

 
We realize the back and forth with multiple court decisions around the CTA can be concerning, so we will continue to keep you updated on further developments.
 
We want to remind you that it is truly in your best interest to speak with an attorney regarding the CTA. Attorneys have particular expertise in this area and are the best equipped to help you.

Information Prepared From ANJC Partner:

December 22, 2024 Update:

Background

Recently, we advised you that under the CTA every business entity organized as a corporate entity or LLC was required to report to the Department of the Treasury, through the Financial Crimes Enforcement Network (FinCEN) specified ownership and managerial information. This report was due to be filed electronically no later than January 1st.

Our notice also explained that there were pending in at least four federal circuits challenges to the constitutionally of the CTA and Treasury’s regulations. At this point, based on requests for preliminary relief, it appears that the circuits are evenly split regarding the lawfulness of the CTA. However, in Texas Top Cop Shop, Inc., et al. v. Garland, et al (E.D. Tex.), the District Court did issue a preliminary injunction prohibiting Treasury, nationwide, from requiring the CTA reports from all covered entities. However, it remained unclear which of the various court decisions FinCIN intended to follow and impose on covered companies.

This week, Treasury has clarified its reporting requirements.  As predicted in our guidance, Treasury has now posted on its webpage the following: “BOI e-Filing Alert: Please note that beneficial ownership information reporting requirements have been affected by a recent federal court order. The Department of the Treasury is appealing that order. In the meantime, reporting companies are not currently required to file a BOIR and are not subject to liability if they fail to do so while the applicable order remains in force. However, reporting companies may still opt to file a BOIR.”

In light of the ruling in Texas Top Cop, it seems unlikely that any covered company would voluntarily want to file sensitive information that has historically been shielded from government intrusion. Moreover, once an entity files, they are subject to an ongoing duty to correct and update the information provided.  Rather than voluntarily submit to this burden, it might be prudent to monitor the websites of your professional association and FinCEN and look for updates from your practice professionals.

December 8, 2024 Update:

The ANJC previously alerted members to the FinCEN BOI reporting requirements under the Corporate Transparency Act. This regulation would have required small businesses, including healthcare practices structured as corporations or PLLCs, to file reports containing information about the individuals who own or control them to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department. 

However, a Texas court just issued (on December 3, 2024) a Preliminary Injunction (Texas Top Cop Shop, Inc. vs. Garland) stating that FinCEN cannot enforce the Corporate Transparency Act and “companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”

As a result, chiropractic businesses are not required to complete the BOI report to FinCEN, at this time.

This preliminary ruling is subject to the court’s final ruling. However, in its ruling, the court made the following broad, sweeping statements: “CTA is likely unconstitutional as outside of Congress’s power. Because the Reporting Rule implements the CTA, it is likely unconstitutional for the same reasons.” The court added that the “extent of the constitutional violation Plaintiffs have shown is best served through a nationwide injunction.”

The full court ruling document can be found here.

For more information and history, you will find our initial release on this requirement here.