Reporting Firms Can Voluntarily Submit BOI Reports
Despite Corporate Transparency Act Injunction
The Financial Crimes Enforcement Network (FinCEN) said recently that reporting companies may continue to submit beneficial ownership information (BOI) reports voluntarily to FinCEN despite the preliminary injunction against the Corporate Transparency Act.
On Dec. 3, 2024, a Texas federal district court issued an order granting a nationwide preliminary injunction that enjoins the Corporate Transparency Act (CTA) and its implementing regulations, which mandate U.S. business entities report to the Treasury Department stakeholder information. The order also stays all deadlines to comply with the CTA’s reporting requirements. The Justice Department, on behalf of the Treasury Department, filed a Notice of Appeal on Dec. 5, 2024.
“While this litigation is ongoing, FinCEN will comply with the order issued by the U.S. District Court for the Eastern District of Texas for as long as it remains in effect,” the FinCEN said in an alert. “Therefore, reporting companies are not currently required to file their [BOI] with FinCEN and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect. Nevertheless, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
FinCEN also noted that the Texas case—Texas Top Cop Shop, Inc., et al. v. Garland et al., No. 4:24-cv-00478 (E.D. Tex.)—is only one of several cases where plaintiffs have challenged the CTA that are pending before courts around the country. Several district courts have said no to requests to enjoin the CTA. Instead, they ruled in favor of the Treasury Department. The FinCEN noted that the government still thinks—consistent with the conclusions of the U.S. District Courts for the Eastern District of Virginia and the District of Oregon—that the CTA is constitutional.
The regulator also reiterated that the CTA “plays a vital role in protecting the U.S. and international financial systems, as well as people across the country, from illicit finance threats like terrorist financing, drug trafficking, and money laundering.” It added that the CTA levels the playing field for millions of small businesses throughout the country, making it more difficult for bad actors to exploit loopholes to gain an unfair advantage.
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