Corporate Transparency Act Enforcement Update

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide order prohibiting the Treasury Department/Financial Crimes Enforcement Network (FinCEN) from enforcing the Corporate Transparency Act (CTA).

This is, however, only a preliminary injunction and not a final decision – and FinCEN has indicated it would appeal this decision.  It is possible that this decision is overturned (temporarily or permanently) and a final decision may not come until after the January 1, 2025 CTA compliance deadline for entities formed prior to January 1, 2024.

In light of the previously applicable January 1, 2025 deadline, combined with the holidays, we recommend that companies finalize their analysis to determine whether or not they meet an exemption to file, identify their beneficial owners, gather all necessary identification documents and stand ready to file – in the event that this decision is overturned before January 1, 2025.

Please note that FinCEN is still accepting filings pursuant to CTA. Reporting companies may consider defensively filing the Beneficial Ownership Information Report.  Such filing would be at the discretion of the reporting company and not a legal requirement so long as CTA remains enjoined.

Please do not hesitate to reach out to your Rimon attorney if you have any questions or would like to discuss this further.

This summary is provided for informational purposes only and is not intended to constitute legal advice nor does it create an attorney-client relationship with Rimon, P.C. or its affiliates.

Geoffrey Perusse counsels businesses in connection with private capital raising, private fund formation, investment activities, securities regulation and compliance matters. Geoff represents sponsors and managers of private funds across asset classes, including real estate, private equity, debt, venture capital and hedge funds, with respect to the structuring, formation and operation of the funds, including regulatory and compliance matters arising under the Investment Advisers Act of 1940, the Securities Act of 1933, and the Investment Company Act of 1940. Read more here