There is important news regarding the Beneficial Owners Interest (BOI) report based upon a recent District Court decision in Texas. In the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., Case No. 4:24-cv-478, the Court found that the Corporate Transparency Act (CTA) was unconstitutional and that Congress exceeded its authority in a “quasi-Orwellian” manner.
The Court enjoined the enforcement of the CTA nationwide, issuing a preliminary injunction that places an immediate (and perhaps permanent) hold on any reporting requirements contained within the Corporate Transparency Act. This is important news regarding the Beneficial Owners Interest (BOI) Report and the information disclosure required of millions of small U.S. and foreign corporations conducting business within the U.S., its territories, and Indian Tribal lands.
The Court’s ruling signifies a halt to the reporting requirements of the CTA and that corporate entities are not required to fulfill the registration requirements of the BOI by the end of this year. In fact, with a new Congress and administration assuming power in mid-January 2025, many in Washington D.C. doubt the CTA will survive.
Is this the end of the BOI reporting requirements? As of the end of November 2024, FinCEN reported more than 8 million qualifying entities had already been submitted. What should otherwise qualifying corporate entities do in the wake of this game-changing decision? The important news regarding the Beneficial Owners Interest (BOI) Report coming out of Texas indicates, for now, that the reporting deadline at the end of the year is no longer in force. In fact, the entire Corporate Transparency Act has been declared unconstitutional based on the decision in Texas Top Cop Shop, Inc., et al. v. Garland, et al.
As of this moment, the reporting requirements of the CTA, including the BOI report, are suspended (if not eliminated). Those with a beneficial ownership interest in qualifying corporate entities are not required to fulfill any obligation to complete the BOI report and submit it within the deadlines of the CTA (end of 2024). It is prudent to continue monitoring this space as the Justice Department may seek to appeal this ruling and set aside the injunction in this case.
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