Update on BOI (Beneficial Ownership Information) filing requirement: court ruling pauses enforcement
As of December 3, 2024, there has been a significant development regarding the BOI filing requirement. The United States District Court for the Eastern District of Texas, under Judge Mazzant, has granted a preliminary injunction that temporarily halts the enforcement of the Corporate Transparency Act (CTA) and its associated reporting rules.
This injunction was issued in response to the Plaintiffs' request, with the Court determining that the CTA's reporting rules are likely unconstitutional. Specifically, the Court found that the rules may exceed Congress's power, making it probable that they could be overturned in the future.
What does it mean for companies?
The immediate effect of this ruling is that companies are no longer required to meet the upcoming January 1, 2025, deadline for submitting their BOI reports. The Court's decision pauses the enforcement of these reporting requirements until further orders are issued, providing a temporary relief from the looming compliance deadline.Under Section 705 of the Administrative Procedure Act (APA), the enforcement of the CTA and its reporting rules is suspended. Therefore, reporting companies are not obligated to comply with the filing deadline while the Court's injunction remains in place.
What should you do now?
If you have already filed your BOI reports, there is no action required on your part at this time. For those who have not yet filed, it’s crucial to seek legal counsel to understand whether it is more beneficial to wait for further developments or proceed with filing at this stage. Each company's situation may differ and consulting with your attorney will ensure you make the right decision moving forward.
As the legal process continues, we will keep you updated on any changes to the status of the CTA and its reporting rules. Don’t hesitate to book a free session with Konstantin if you have any doubts regarding BOI or any other aspect of running your US-based business.
