UPDATE: FinCEN's Response to U.S. District Court Decision - Notice of Appeal Filed

Earlier this week, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a public statement regarding the U.S. District Court for the Eastern District of Texas’ decision in Texas Top Cop Shop, Inc., et al. v. Garland, et al., Case No. 4:24-cv-478 (E.D. Tex.). In its ruling, the court determined that the Corporate Transparency Act (CTA) and its associated Reporting Rule are likely unconstitutional and exceed Congress’s authority. As a result, the court issued a nationwide preliminary injunction halting the enforcement of the CTA.

In its public statement FinCEN states: “While this litigation is ongoing, FinCEN will comply with the order issued by the U.S. District Court for the Eastern District of Texas for as long as it remains in effect. Therefore, reporting companies are not currently required to file their beneficial ownership information with FinCEN and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect. Nevertheless, reporting companies may continue to voluntarily submit beneficial ownership information reports.” Furthermore, the Department of Justice, on behalf of the U.S. Department of the Treasury, has filed a Notice of Appeal.

While litigation is ongoing, businesses that (i) have already filed a beneficial ownership report (BOIR) with FinCEN, are not required to update it to reflect any changes that have occurred since the initial filing; and (ii) are required to file a BOIR are not currently obligated to do so, although businesses may voluntarily file a BOIR with FinCEN. Regardless of whether your business has filed or is required to file a BOIR, it is strongly recommended that you continue to monitor developments regarding the ultimate disposition of the CTA.

If you have any questions about the CTA, please contact Attorneys Jeffrey E. Swaim, Jennifer Z. Flanagan, or Zachary B. Luczyk.