In a significant development for businesses nationwide, the U.S. Court of Appeals for the Fifth Circuit has reinstated a nationwide injunction against the enforcement of the Corporate Transparency Act. This decision halts the requirement for companies to report their beneficial ownership information to the Financial Crimes Enforcement Network (or FinCEN), which was initially set to take effect on Jan. 1, 2025. (Journal of Accountancy)

"Accordingly," FinCEN affirms in a Dec. 27 alert, "as of Dec. 26, 2024, the injunction issued by the district court in Texas Top Cop Shop, Inc. v. Garland is in effect and reporting companies are not currently required to file beneficial ownership information with FinCEN."

The CTA, enacted in 2021, mandates that corporations and limited liability companies disclose information about their beneficial owners to FinCEN. This measure aims to combat money laundering and enhance financial transparency. However, the law has faced legal challenges, with opponents arguing that it infringes on states’ rights and constitutes excessive government surveillance. (Reuters)

Earlier this month, a federal judge in Texas issued a nationwide injunction, deeming the CTA likely unconstitutional. The Department of Justice (DOJ) appealed this decision, and the Fifth Circuit initially lifted the injunction, allowing the law’s enforcement to proceed. However, in a recent turn of events, the appeals court reinstated the injunction, pausing the enforcement of the CTA until a final decision is made on its constitutionality. (Reuters)

In response to the evolving legal challenges, FinCEN has extended the BOI reporting deadline for most companies to January 13, 2025. This extension provides businesses with additional time to comply, should the injunction be lifted. FinCEN stated, “Reporting companies created or registered before Jan. 1, 2024, have until Jan. 13, 2025, to file initial BOI reports with FinCEN.” (Journal of Accountancy)

The legal back-and-forth has created uncertainty among businesses regarding compliance with the BOI reporting requirements. The American Institute of CPAs advises that, while the injunction is in place, companies are not required to file their BOI reports. However, it is prudent for businesses to prepare the necessary information and be ready to file promptly if the injunction is lifted.

As the situation continues to evolve, the Maryland Association of CPAs recommends that its members stay informed about the latest developments and ensure that clients are prepared to meet BOI reporting requirements if and when they come into effect. Maintaining open communication with clients during this period of uncertainty is crucial to ensure compliance and avoid potential penalties once a final decision is reached.

• Get details and further resources by visiting the AICPA's BOI reporting resource center.

The content in this blog post was compiled with help from ChatGPT.