Court order has temporarily halted enforcement of federal reporting requirement.

Enforcement of Beneficial Ownership Information (BOI) Reporting required by the federal Corporate Transparency Act (CTA) of 2021 has been temporarily blocked. The original reporting deadline for existing entities was December 31.

Why is BOI reporting enforcement halted?

A federal judge in Texas granted a nationwide preliminary injunction on December 3 in the case of Texas Top Cop Shop, Inc. et al. v Garland et al. The court order temporarily blocks enforcement of BOI rules.

What does the injunction mean for business owners?

The injunction means that business owners cannot be fined for failure to report BOI.

For now, filing BOI reports is voluntary, according to the Financial Crimes Enforcement Network (FinCEN).

What’s next for BOI reporting?

It’s uncertain what happens next. The validity of the CTA may be determined by appellate court decisions or a Supreme Court review.

In fact, two days after the December 3 injunction was issued, the Government filed a Notice to Appeal to the U.S. Court of Appeals for the Fifth Circuit. Forbes reports that even after the Fifth Circuit makes a decision there is likely to be a further appeal to the Supreme Court.

Business should be “prepared to comply with the CTA reporting requirements if they are revived as the case proceeds, or if the injunction is lifted,” The National Law Review said.

 

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