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Corporate Transparency Act Temporary Injunction

Rödl & Partner Tax Matters Volume 2024-15, published December 16, 2024

In Tax Matters Vol 2023-9, we provided information regarding the Corporate Transparency Act (“CTA”) and the related compliance required by January 1, 2025. On December 3, 2024, a federal district court issued an order prohibiting the enforcement of the Corporate Transparency Act and its beneficial ownership information (“BOI”) reporting rule, indicating the rule is likely unconstitutional. On December 5, 2024, the Department of Justice (“DOJ”) appealed to the Fifth Circuit. The Financial Crimes Enforcement Network (“FinCEN)” has issued an alert stating that reporting companies are not currently required to file BOI reports while the order remains in force but can do so voluntarily and will not be subject to penalties for failing to report their BOI. It is worth noting that that FinCEN did not state whether it will provide an extended deadline for filing BOI reports if the preliminary injunction is suddenly lifted.

What Should You Do Now?

1. Consider Whether to File Your BOI Report or Wait

The constitutionality of the CTA remains unresolved, but the injunction could be overturned at any time. You may choose to voluntarily file now or wait and see what happens.

2. Be Prepared to File Quickly if the Injunction is Lifted

As mentioned above, FinCEN has not stated whether an extended deadline will be provided if the injunction is lifted so ensure you are ready to file promptly if needed.

3. Continue to Factor the CTA into Business Changes

Continue to evaluate CTA’s potential implications on changes in your business so you are prepared.

The future of the CTA and BOI reporting, including when reports need to be submitted, is uncertain. There are conflicting court decisions regarding the validity of the CTA. As such, it is strongly advised to closely monitor developments and be prepared to act quickly if necessary.

If you have any questions, please contact your local Rödl & Partner representative.

This publication contains general information and is not intended to be comprehensive or to provide legal, tax or other professional advice or services. This publication is not a substitute for such professional advice or services, and it should not be acted on or relied upon or used as a basis for any decision or action that may affect you or your business. Consult your advisors. The fact that you have received this publication does not create an accountant-client or advisory relationship between you and Rödl Langford de Kock LLP or any of its subsidiaries or affiliates. If you wish to hire Rödl Langford de Kock LLP or any of its subsidiaries or affiliates you will need to speak with one of our accountants and enter into a written agreement establishing the scope of engagement. We have made reasonable efforts to ensure the accuracy of the information contained in this publication, however this cannot be guaranteed. Neither Rödl Langford de Kock LLP nor any of its subsidiaries nor any affiliate thereof or other related entity shall have any liability to any person or entity which relies on the information contained in this publication, including, but not limited to, incidental or consequential damages arising from errors or omissions. Any such reliance is solely at user’s risk. Any tax and/or accounting information contained herein is based on our understanding of the facts and assumptions we have been asked to make for the purpose of this publication alone, and on the tax laws and/or accounting principles in effect as of the date of this advice. No assurance is given that the conclusions would be the same if the facts or assumptions change, or are not as we understand them, or that the tax laws and/or accounting principles will not change subsequent to the issuance of these conclusions. In addition, we do not undertake any continuing obligation to advise on future changes in the tax laws and/or accounting principles, or of the impact on the conclusions herein. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Rödl Langford de Kock LP.

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Elisa Fay

CPA

Managing Partner Rödl National Tax

+1 404 525 2600

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