Federal Injunction Currently Suspending Corporate Transparency Act Reporting Requirements
On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction on enforcement of the Corporate Transparency Act (CTA). This was overturned on December 23 and filings were resumed with a later date for compliance. And yet again, this was overturned resulting in another stay. Where is it now? In the hands of the Supreme Court. So, if you haven’t filed yet, keep your eyes and ears open to see what happens in the highest court in the land because if you’re a business that was initially required to file a beneficial ownership information (BOI) report based on the terms of this law, the legal battle will impact your filing requirements.
The Financial Crimes Enforcement Network (FinCEN) has issued the following statement on the BOI Report filing page on their website: “Please note that beneficial ownership information reporting requirements have been affected by a recent federal court order. The Department of the Treasury is appealing that order. In the meantime, reporting companies are not currently required to file a BOIR and are not subject to liability if they fail to do so while the applicable order remains in force. However, reporting companies may still opt to file a BOIR.” If you are a legal junky, there is more information available at https://www.fincen.gov/boi that goes through all of the court cases that are currently pending throughout the country in regard to the CTA.
If you own a business that has been impacted by this injunction, it’s important to pay attention as the appeals process plays out. While it may take several months – or potentially longer – for this process to resolve, it’s possible that the Supreme Court may overturn the injunction. Depending on the resolution of this injunction, reporting requirements and all associated deadlines may change at a moment’s notice. Timely response to new requirements may be necessary to avoid potential penalties for noncompliance.
What Businesses are Impacted by the Corporate Transparency Act?
Corporations, LLCs and other business entities that were required to file a document with a Secretary of State or a similar office at their time of establishment were required to file a BOI report under the terms of the Corporate Transparency Act unless the business qualifies for an exemption. While there are several different exemptions delineated by the original law, it’s important to understand that most small businesses are not considered to be exempt. Businesses covered under this law won’t need to file until the appeal on the injunction is resolved.
We recommend that you review our initial Corporate Transparency Act blog post for detailed information on this law.
How Should My Business Proceed While this Case is Pending?
It’s important to be aware of the implications of this injunction and pay attention to when it is resolved to know whether you will need to file and how soon the deadline will be. Keep in mind that you’re still able to file the BOI report for your business while the injunction is in place and in some situations, it may make sense to just file the report now.
At the Law Office of E.C. Lewis, we’re making the following recommendations to our clients:
If you don’t have a problem making the ownership of your company known to the government, then go ahead and file the BOI report now to avoid the risk of costly fines if the injunction is lifted and you fail to file in time afterwards. But if you need to keep the identity of the ownership of your company private, you should hold off on filing until the injunction is resolved and any changes to the law due to the new presidential administration and Supreme Court rulings are finalized.
Elizabeth Lewis Can Help Ensure You’re Compliant with All Laws Impacting Your Business
The BOI reporting injunction isn’t the only legal matter impacting your business. There have been several other changes to Colorado laws impacting businesses in recent years, and it’s important to work with an experienced small business attorney who can ensure you remain compliant. If you haven’t had your company documents, contracts and employment agreements reviewed by a small business attorney recently, it may be time to check in with a lawyer and make sure your business is still compliant with all current laws.
Elizabeth Lewis is a small business attorney providing comprehensive legal services for businesses in Denver and throughout Colorado, and she can help you remain compliant with all state and federal laws. Elizabeth is closely monitoring the latest developments with the Corporate Transparency Act injunction and will keep your business informed as the case progresses. This ensures you’ll remain compliant in the event that filing requirements are reinstated. Elizabeth can also review all your contracts and business documents to ensure they’re adhering to the most recent changes in Colorado law. This will provide you with peace of mind that you’re in compliance and won’t incur costly fines that could easily be avoided.
Contact us today to schedule a consultation. The Law Office of E.C. Lewis serves small and medium-sized businesses in Denver and throughout Colorado.