The new Corporate Transparency Act (CTA), requiring businesses to file a Beneficial Ownership Information (BOI) report identifying their key stakeholders and executives, is back on hold. But this can change again, even soon, so having the report at the ready is a good idea.
In the continuing revolving door of court approvals and halts, the Fifth Circuit Court overturned yesterday, December 26, 2024, the reinstatement of the CTA, issued only days before, on December 23, 2024.
The CTA originally passed in Congress on January 1, 2021, with an effective date of January 1, 2024 and a filing deadline of January 1, 2025, depending on the age and location of the company.
Then on December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against the enforcement of the CTA, holding that that it exceeds the U.S. Congress’s powers.
Shortly after, on December 23, the U.S. Department of Justice's appeal was granted by a New Orleans-based court, which lifted the injunction under the argument of public interest and national security.
On December 26, the Fifth Circuit Court overturned the previous order and reinstated the injunction.
For now, the CTA's enforcement is halted nationwide, and companies are not required to file a BOI report.
However, the case is currently under expedited appellate review, and a new judgment may be rendered soon.
Filing the BOI is still allowable, on a voluntary rather than legally required basis.
Given the rapid changes in the law's status, we recommend that business owners and executives compile their BOI report, and either submit it or have it ready for submission on short notice.
More information on which businesses are required to file, who is considered a beneficial owner, and what should be included in the report can be found here.
For any questions or assistance, contact us.
Katherin Valdez-Lazo is an associate in Vishnick McGovern Milizio LLP’s Business and Transactional Law practice group, including the Mergers and Acquisitions and Commercial Real Estate practices. She can be reached at kvaldez-lazo@vmmlegal.com and 516.437.4385 x143.
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