A recent ruling by the U.S. District Court for the Eastern District of Texas has resulted in a temporary halt on the enforcement of the Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) reporting requirements by FinCEN. This decision means businesses are currently not obligated to submit BOI reports and will not face penalties for non-compliance during this period. Despite this pause, companies still have the option to voluntarily file their BOI reports with FinCEN.
In light of this development, Polaris Tax & Accounting has paused the processing of BOI reports at this time.
In this article, we’ll break down what this injunction means for businesses and how to navigate the current uncertainty.
Understanding the Corporate Transparency Act and BOI Reporting Requirements
The Corporate Transparency Act requires most entities formed or registered in the U.S. before January 1, 2024, to provide beneficial ownership information to FinCEN. To enforce this, the BOI Reporting Rule sets a compliance deadline of January 1, 2025, for existing entities.
The Court’s Recent Decision
On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary nationwide injunction in the case Texas Top Cop Shop, Inc., et al. v. Garland, et al. (No. 4:24-cv-00478). The ruling:
- Temporarily blocks the enforcement of the CTA and its BOI reporting requirements.
- Suspends all deadlines associated with BOI reporting compliance.
As of December 5, 2024, the Department of Justice has filed an appeal on behalf of the Department of the Treasury.
FinCEN’s Current Stance
For the time being, FinCEN has stated it will adhere to the court’s ruling. As a result:
- Businesses are not required to submit BOI reports during the injunction period.
- There will be no penalties for non-compliance during this time.
- Businesses can still voluntarily file BOI reports if they choose to.
What This Means for Your Business
While this injunction is in effect, companies are not required to submit BOI reports, and there is no risk of penalties for non-filing. However, it’s important to monitor developments closely to ensure compliance if circumstances change.
Polaris Tax & Accounting’s Approach to BOI Reporting
At Polaris Tax & Accounting, we are dedicated to supporting businesses during this period of legal and regulatory uncertainty. In response to the current situation:
- We have temporarily paused the processing of BOI reports.
- We are actively monitoring the legal proceedings, including the Department of Justice’s appeal and any related updates.
- As new guidance emerges, we will promptly notify our clients and provide the resources needed to meet any updated reporting requirements.
Next Steps
In times of regulatory change, staying informed and proactive is essential. Polaris Tax & Accounting is committed to keeping you updated with reliable and timely information.
If you have questions about how this court ruling may affect your business or need assistance preparing for potential changes, our team is here to help.