Update Regarding Corporate Transparency Act (CTA)
The bulletin below was written by GFC’s legal counsel, Gravel & Shea. Questions regarding CTA requirements should be directed to your business or organization’s legal counsel, as the CTA is a legal matter and not a tax filing matter.
On Tuesday, December 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.), a federal district court in the Eastern District of Texas, Sherman Division, issued an order granting a nationwide preliminary injunction that: (1) enjoins the Corporate Transparency Act (“CTA”), including enforcement of that statute and regulations implementing its beneficial ownership information reporting requirements, and, specifically, (2) stays all deadlines to comply with the CTA’s reporting requirements. The Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024.
The injunction represents a material legal development with implications for businesses nationwide. While the ruling temporarily halts compliance obligations, the final outcome remains uncertain. Given that (a) the CTA and its reporting rule have received a great deal of interest from the business community and judiciary, (b) a new Congress and administration will take office in the coming year, and (c) the civil and criminal penalties for noncompliance can be severe, reporting companies and their beneficial owners should, at a moment’s notice, still be prepared to comply with the CTA on a moments notice in case further judicial or legislative developments revive the requirement to comply.
FINCEN is continuing to accept filings made on a voluntary basis. Commentators have expressed grave concern about the number of businesses that have not filed and the ability of the website to accept filings should the injunction be overturned and the reporting deadline not extended by a material time. We therefore caution that we cannot guaranty an ability to file in a timely manner.
In the absence of further guidance, we will be halting all filings. If you would like us to file at this time, please let us know.
