Federal Government Enjoined From Enforcing Beneficial Ownership Information Requirement

Federal Government Enjoined From Enforcing Beneficial Ownership Information Requirement

In our Nov. 22nd e-Lert, we reported that most corporations, limited liability companies, and similar entities must file their initial Beneficial Ownership Information (BOI) reports by January 1, 2025, unless they qualify for specific exemptions. The requirement to file the BOI report is part of the Corporate Transparency Act (CTA) passed by Congress to enhance transparency in company ownership and help prevent money laundering, tax fraud, and other financial crimes.

On Tuesday, December 3, 2024, the U.S. District Court for the Eastern District of Texas (Court) issued a “preliminary injunction” that applies nationwide and prohibits the federal government from enforcing the CTA. The Court cites a number of reasons for its ruling including allowing the Court sufficient time to consider the merits of the case given the “fast-approaching deadline” for companies to file the reports or face serious penalties.

According to the Court’s ruling, “reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.” This means that, as of today, if your company does not meet the exemptions and is subject to filing the BOI report, it is not subject to the January 1, 2025, deadline. However, further guidance or decisions by other courts could resume enforcement.

JSI recommends that clients take a measured approach during this period of uncertainty. While companies are not currently required to proceed with BOI filings, they may choose to do so voluntarily to avoid potential complications from future deadline changes. For those who prefer to wait, we strongly advise maintaining all collected information and continuing preparation efforts to ensure readiness for various possible outcomes.

If you decide to move forward with filing the report and would like our assistance, or have questions regarding the exceptions or Court decision, please contact John Kuykendall or Brett Hallagan at 301-459-7590.