The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced that reporting companies are not currently required to file beneficial ownership information (BOI) in light of recent legal developments.
This news follows a recent federal court decision in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al.
“In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force,” according to a FinCEN statement posted Jan. 2. “However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
The U.S. District Court for the Eastern District of Texas granted a request for a preliminary injunction to block the Treasury Department from enforcing the Corporate Transparency Act’s (CTA) BOI reporting requirements in early December.
The U.S. Fifth Circuit Court of Appeals granted a stay of the district court’s preliminary injunction and FinCEN extended reporting deadlines on Dec. 23. The Treasury notified the public of the ruling, adding that it would extend reporting deadlines to provide reporting companies additional time to comply with beneficial ownership reporting requirements.
Three days later, however, a separate panel of the U.S. Court of Appeals for the Fifth Circuit issued an order vacating the Dec. 23 order granting a stay of the preliminary injunction. On Dec. 31, the Department of Justice, acting on the Treasury’s behalf, sought a stay of the injunction pending the ongoing appeal from the Supreme Court.
Texas Top Cop Shop, Inc. is one of many cases challenging whether the CTA exceeds the Constitution’s limits on Congress’s power and enjoining the Treasury from enforcing the CTA against the plaintiffs in each of the pending lawsuits.
In March of last year, the U.S. District Court for the Northern District of Alabama, Northeastern Division concluded the government, even in the absence of an injunction, is not currently enforcing the CTA against the plaintiffs in that action. However, other district courts have ruled in favor of the Treasury, denying requests to enjoin the CTA.
Dodd Frank Update will continue to follow this matter as it develops.