There are literally tens of millions of limited liability companies, partnerships and other entities facing a year-end deadline to prepare the new Beneficial Ownership Information (“BOI”) as required by the Corporate Transparency Act ( “CTA”) and the Treasury Department’s Financial Crimes Enforcement Network (“FINCEN”) regulations. Awash in these government acronyms are many private entities that have already filed and a veritable flood of entities willing or preparing to file by that deadline.


Or maybe not.


As this deadline approaches, more than a dozen cases have been filed in the U.S. District Courts challenging the legality of the CTA and the BOI’s filing requirements. In one of these cases Texas Top Cop Shop, Inc. against GarlandEDTex. No. 24-CV-478, Dkt. #30 (December 3, 2024), the U.S. District Court held that Congress exceeded its powers under the Commerce Clause of the U.S. Constitution in enacting the CTA and that the CTA, together with its implementing regulations, is therefore invalid. The ruling in that case includes the imposition of a temporary injunction to restrain the Ministry of Finance (and therefore FINCEN) from enforcing the CTA through the BOI application requirements.


If you think this at least means “game over” for the 2024 BOI filing requirement, you are absolutely wrong. The Treasury Department has already filed an appeal with the U.S. Court of Appeals for the Fifth Circuit, which could expedite the appeal because of the looming deadline. Even if the Fifth Circuit decides the case, there will likely be an appeal to the U.S. Supreme Court. What the U.S. Supreme Court might or might not do with the CTA is anyone’s guess. The U.S. Supreme Court could uphold the CTA, declare the CTA invalid, or take an interim step to effectively suspend the BOI’s filing obligation until the case is more fully developed, i.e., the issue is legally decided. This would likely result in the Treasury Department granting an additional grace period for filings until the constitutionality of the CTA is finally determined.


Note that none of this is the fault of the Ministry of Finance or FINCEN. These are challenges to Congress’ passage of the CTA. Ultimately, FINCEN has done nothing more than try to carry out the CTA’s mandates to the best of its ability. Personally, having regularly witnessed the misuse of LLCs and other entities by bad actors for nefarious purposes, I am generally in favor of the CTA’s goals. After all, sunlight is the best disinfectant and honest people will never complain about having to make their activities public.



Nevertheless, and regardless of this preliminary injunction, a temporary suspension of the BOI filing requirement would not be a bad thing as it is becoming increasingly clear that the FINCEN infrastructure for BOI filings is not ready for prime time.


Recall that FINCEN had to set up, within a relatively short period of time, a system that could process tens of millions of entity files and also have the function of assigning FINCEN identification numbers to individuals who wanted them, to make filing easier. This was a big task and FINCEN should be commended for what they have achieved so far.


I even had an issue with a submission that was caused by an error on the BOI submission website. In this situation I was able to contact FINCEN, inform them of the problem, and within a few days the problem was resolved. While anecdotally there have been other issues with the BOI system, this shows that FINCEN is actively trying to resolve these issues. As suggested by the national guru of BOI reporting, the Kentucky attorney Thomas E. Rutledge of Stoll Keenon Ogen PLLCDespite everything that is going on, FINCEN must continue to collect and analyze information to improve the system.


In the meantime, people who have entities subject to reporting should remain prepared to file. It is entirely possible that the U.S. Court of Appeals, and perhaps even the U.S. Supreme Court, will invalidate the preliminary injunction, thus resetting the January 1 filing deadline. In that regard, most people should just go ahead and file the BOI application and not worry about it anymore. In the event that the CTA is found to be unconstitutional, the most likely thing that will happen is that FINCEN will simply delete the data collected and that will be the end of it. But I don’t expect that to happen unless the U.S. Supreme Court makes a major about-face on the scope of Congress’ powers under the Commerce Clause.


Stay informed.



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Nebraska medical marijuana legalization is closer to reality after judge's ruling but an appeal is likely
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Lancaster County District Court rules decision to legalize medical marijuana in Nebraska should s...
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Nebraska judge’s ruling edges the state closer to legalizing medical marijuana - Toronto Star
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Nebraska voters decision to legalize medical marijuana will stand - KETV
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Ohio Bill Would Crack Down on Intoxicating Hemp Products - Cleveland Scene
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Florida approves 22 applicants for medical marijuana dispensary licenses
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Sioux Falls woman cited for weed, more - nwestiowa.com
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Mankato limits cannabis retailers to four, sets strict zoning rules
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Nebraska Judge Dismisses Legal Challenge to Medical Marijuana Initiatives Approved by Voters
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