Category: Client Alert

Client Alert: Treasury Suspends CTA Enforcement for U.S. Citizens & Domestic Companies

On March 2, 2025, the U.S. Treasury announced a temporary suspension of Corporate Transparency Act (CTA) enforcement for U.S. citizens, domestic reporting companies, and their beneficial owners, and indicated it intends to narrow the CTA’s scope so that the reporting requirements apply only to foreign reporting companies.

Here’s what this means:
🔹Narrowing the Scope of Reporting: The Treasury aims to limit CTA reporting only to foreign reporting companies, potentially eliminating compliance for U.S. businesses.
🔹Enforcement Temporarily Paused: While the CTA’s reporting obligations remain in place, no penalties or fines for noncompliance will be issued at this time.
🔹Upcoming Rule Changes: FinCEN is expected to release an interim final rule by March 21, 2025, extending deadlines and clarifying BOI reporting obligations.

Next Steps for Businesses:
✅ Domestic Companies: If you’ve already filed BOI reports or were preparing to, consider pausing further action until FinCEN provides clarity.
✅ Foreign Companies: Continue preparing BOI reports, given reporting obligations are likely to remain, but consider waiting to file until further guidance is provided by FinCEN.
✅ Stay Alert: More guidance is coming soon— stay tuned for revised reporting requirements and additional enforcement decisions.

We’re tracking developments and will provide updates as FinCEN releases new guidance. Read more here.

For more information on our CTA team, visit their bios here:
Lorren Patterson
Paul-Kalvin Collins
Japera Parker

#CorporateTransparencyAct #CTA #FinCEN #BOI #RegulatoryCompliance #LegalUpdate

Client Alert: “CTA Whiplash: FinCEN Pumps the Brakes on Enforcement—What’s Next?”

Just as companies were gearing up to meet the March 21st deadline for Corporate Transparency Act (CTA) compliance, FinCEN hit the brakes on enforcement. On Thursday, FinCEN announced it will not issue fines, penalties, or take enforcement actions against companies that fail to file or update beneficial ownership information (BOI) reports while it works on extending deadlines.

What Just Happened?
• Feb. 17-18 – A federal court lifts the last nationwide injunction, reinstating CTA reporting requirements. In response, FinCEN extends the filing deadline for most companies to March 21, 2025.
• Feb. 27 – FinCEN announces that non-compliance won’t be penalized—for now.

What’s Next?
• By March 21, 2025 – FinCEN expects to issue an interim final rule extending BOI deadlines.
• Later in 2025 – FinCEN plans to revise reporting requirements to reduce the burden on small businesses.

What Does This Mean for You?
• Filing is effectively voluntary (for now). Companies may choose to hold off until clearer guidance is issued.
• Corrections may still be necessary—FinCEN’s pause doesn’t explicitly cover fixing past errors.
• Stay informed—Federal litigation and legislative challenges to the CTA are ongoing.

Buckle up—the CTA ride isn’t over yet. We’re tracking developments and will provide updates as FinCEN releases new guidance. Read more here.

For more information on our CTA team, visit their bios here:
Lorren Patterson
Paul-Kalvin Collins
Japera Parker

#CorporateTransparencyAct #CTA #FinCEN #BOI #RegulatoryCompliance #LegalUpdate

Client Alert: CTA Springs Back into Action – New BOI Report Filing Deadline Set for March 21, 2025

Mark your calendars. After months of legal back and forth, the Corporate Transparency Act (“CTA”) reporting requirements are back in effect, for now, with a new deadline of March 21, 2025.

The U.S. District Court for the Eastern District of Texas lifted its nationwide preliminary injunction, aligning with the Supreme Court of the United States’ decision earlier this year to stay a similar nationwide injunction. Consequently, reporting obligations are back on and FinCEN has extended the filing deadline to March 21, 2025.

Action Steps:
✅ Assess Your Status and Compile Ownership and Control Information: Assess if your entity qualifies as a “reporting company” under the CTA and gather the most up to date ownership and control information for your entity.
✅ Obtain FinCEN IDs or Identifying Information: Collect identifying information for each person who qualifies as a “beneficial owner” under the CTA. Encourage beneficial owners to secure a FinCEN ID to streamline reporting.
✅ Prepare for Submission: Be ready to file initial, updated, or corrected Beneficial Ownership Information (BOI) reports by the March 21 deadline using FinCEN’s E-Filing system.
✅ Stay Informed: Monitor ongoing federal litigation and potential legislative changes affecting CTA requirements.

FinCEN acknowledges that reporting companies may need additional time to meet the March 21 deadline and has stated that if it opts to modify the deadline, an update will be shared before that date. Additionally, in the coming months, FinCEN intends to revise reporting rules to reduce burdens for low-risk entities, including U.S. small businesses, while focusing on entities posing greater national security risks. This may include developing additional reporting exemptions.

Our CTA team will keep you updated on the latest developments. To read the full Client Alert, visit here.

For more information on our CTA team, visit their bios here:
Lorren Patterson
Paul-Kalvin Collins
Japera Parker

#CorporateTransparencyAct #CTA #FinCEN #BusinessCompliance #LegalUpdate

Client Alert: “The Rollercoaster Ride Continues: CTA Reporting Obligations Still on Hold”

The Corporate Transparency Act (“CTA”) continues to take reporting companies on a roller coaster ride. Now, there are not just one, but two Eastern District of Texas federal cases challenging the requirement for certain companies to disclose their beneficial ownership information to the Financial Crimes Enforcement Network (“FinCEN”).

While you should hold on tight with your seatbelt fastened, the bottom line is that, for the time being, the reporting requirements are still on hold.

What’s Happening?
Two separate cases in the Eastern District of Texas have led to nationwide injunctions blocking enforcement of CTA’s beneficial ownership reporting requirements. The Supreme Court of the United States briefly reinstated the reporting requirement in Texas Top Cop Shop v. Garland, but a second case, Smith v. U.S. Department of the Treasury, has put reporting on hold again. Now, the government has appealed the Smith injunction with FinCEN indicating it will briefly extend reporting deadlines and potentially modify its requirements altogether for lower-risk entities, should the government succeed.

What It Means for Businesses:
✅ No Immediate Filing Required – Companies are NOT currently required to file beneficial ownership information within FinCEN.
✅ No Penalties for Missed Deadlines – Entities that missed earlier deadlines will not face penalties while the injunctions are in place.
✅ Assess Your Status and Compile Information – Determine if your entity qualifies as a “reporting company,” and if so, continue to gather BOI and stay on top of ownership changes.
✅ Stay Informed – The legal status of the CTA is evolving quickly with the potential for revised requirements or quickly reinstated deadlines.
✅ Voluntary Reporting – You can still submit reports to FinCEN, but it’s not required.

Our CTA team will keep you updated on the latest developments. To read the full Client Alert, visit here.

For more information on our CTA team, visit their bios here:
Lorren Patterson
Paul-Kalvin Collins
Japera Parker

UPDATE: FinCEN Responds to Preliminary Injunction on CTA Enforcement

As we shared in our client alert last week, on December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction in Texas Top Cop Shop, Inc., et al. v. Garland, et al., temporarily halting enforcement of the Corporate Transparency Act (“CTA”) and its beneficial ownership information (“BOI”) reporting requirements.

In response, FinCEN announced it will comply with the Court’s order for as long as it remains in effect, noting that during this time reporting companies are not currently required to file BOI reports and will not face penalties for failing to report while the injunction remains in effect. Voluntary submissions, however, are still permitted.

What This Means for You:

No Immediate Filing Requirement: The preliminary injunction stays all BOI reporting requirement deadlines for now. Reporting companies are momentarily relieved of reporting obligations.

Litigation Ongoing: As expected, the Department of Justice filed a Notice of Appeal on behalf of the Department of the Treasury, signaling the government’s intent to challenge the court’s decision. The ultimate status of the injunction and the CTA remains uncertain, pending further court rulings or guidance.

Preparation Still Recommended: While filing is currently paused, reporting companies should nevertheless continue assessing their BOI reporting requirements and gathering necessary information to ensure readiness if the injunction is lifted. FinCEN has not yet provided guidance on how much time reporting companies will be granted to file their BOI reports if the Texas District Court’s injunction is lifted and how quickly enforcement of the CTA would resume.
Next Steps

We advise clients to monitor this matter closely and maintain preparation for potential filing requirements. Our team is actively tracking developments and will provide updates as the matter evolves. To read more on the recent CTA preliminary injunction in Texas Top Cop Shop, Inc., et al. v. Garland, et al., visit here.

If you have specific questions or need assistance with your compliance strategy, please do not hesitate to contact the BG CTA Team:

Lorren Patterson – lpatterson@baileyglasser.com

Paul-Kalvin Collins – pcollins@baileyglasser.com

Japera Parker – jparker@baileyglasser.com

Client Alert: Holiday Surprise: Nationwide Injunction Halts Corporate Transparency Act Enforcement

Authored by Corporate Practice Group partner Lorren Patterson and corporate attorneys Paul-Kalvin Collins and Japera Parker

Introduction

The Corporate Transparency Act (“CTA”) requires most companies—except for certain exempt entities—to disclose their ownership details to the Financial Crimes Enforcement Network (“FinCEN”). A looming January 1, 2025 reporting deadline for entities formed prior to January 1, 2024 had many companies and compliance departments on edge. But mere weeks before this deadline, a federal court issued a nationwide injunction, preliminarily enjoining the CTA’s enforcement and staying reporting requirements. This temporary relief gives businesses that have yet to submit their information to FinCEN a welcome pause, although this could change rapidly depending on the government’s next steps.

In this article, we break down the outcome of the ruling and explain how it could affect your business, whether you have already filed your information with FinCEN or were preparing to do so by the end of the year.

Texas Federal Court Steps in and Gives a (Temporary) Holiday Gift

On December 3, 2024, in Texas Top Cop Shop, Inc., et al. v. Garland, et al., Case No. 4:24-cv-478 (E.D. Tex.), the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction temporarily prohibiting the enforcement of the CTA and the FinCEN Reporting Rule.

The CTA and Reporting Rule require domestic entities created by the filing of a document with a secretary of state and foreign entities that have registered to do business in the United States (“Reporting Companies”) to file a Beneficial Ownership Information (“BOI”) Report with FinCEN, identifying personal information about the individuals who directly or indirectly own a certain percentage or otherwise control the company, subject to certain exemptions from reporting.

The Court’s decision temporarily halts the CTA’s reporting requirements and enforcement mechanisms for all Reporting Companies across the United States, providing a potential reprieve to approximately 32.6 million entities that were preparing to comply with the January 1, 2025 deadline. Read more.

Client Alert: Protecting Children Online on Universal Children’s Day

Today is Universal Children’s Day, celebrated on November 20th each year to promote international togetherness, awareness among children worldwide, and improving children’s welfare.

In the article, “Protecting Children Online on Universal Children’s Day,” Sharon Iskra, Bailey Glasser partner and leader of our Institutional Abuse & Neglect team, encourages us to celebrate by reflecting on all the wonders of childhood: the innocence, joy, curiosity, and energy, but realizing the hazards to today’s children, especially online, where children can be trapped and manipulated through child sexual abuse materials (CSAM).

“It’s up to every one of us to protect kids, whether they’re our own or those we encounter through work or friends. Child safety IS your business – and at Bailey Glasser, it’s our business too,” Sharon writes.

One of the best things we can do to protect a child is to be a genuinely safe person of trust for them. Practice these fundamentals as appropriate in the context of your relationship with a child:

1. Parents/caregivers, talk to your children regularly and in age-appropriate ways about online safety.
2. Empower children, teach them to trust their instincts and repeat to them that if something doesn’t seem right or frightens them, take it to a safe adult right away.
3. Teach body integrity and self-worth.
4. Remind children that adults are supposed to protect children, and children are supposed to be children.

Read the full article to learn more tips about how to be a person of trust for children, how to protect them from CSAM, and for nationally sourced resources on how to begin talking to your child.

Learn more information on Sharon Iskra by visiting here.

#UniversalChildrensDay #CSAM #Onlinesafety #Abuse #Neglect #BaileyGlasser #ClientAlert

Client Alert: Friend or Foe? Legal Risks Arising From ChatGPT and Other Generative AI Software

Introduction

Recent breakthroughs in generative artificial intelligence (AI) have captured significant media attention. Developers argue that the technology, which learns from data to produce new text, visual, or audio content based on a user’s prompt, will turbocharge productivity and revolutionize business. Organizations in sectors ranging from banking to health care to journalism are already exploring integrating tools like OpenAI’s ChatGPT chatbot and DALL-E image generator into their workplaces.

These new tools should be approached with a great deal of caution as introducing generative AI into your business could create a complex minefield of legal risks. The technology raises significant dangers related to breaches of confidentiality and data privacy, intellectual property infringement, obligations to consumers, and liabilities for negligence, defamation, or discrimination related to the use of false or biased information.

Earlier in June, a Manhattan lawyer faced sanctions in federal court for filing a legal brief generated by ChatGPT which included several citations to nonexistent cases. After being scolded by the judge for relying on “legal gibberish” generated by AI, the attorney admitted that he had no idea that ChatGPT could fabricate cases. At a recent United States Senate hearing on the dangers of AI and potential regulatory safeguards, OpenAI’s CEO, Sam Altman, practically begged lawmakers to create a new AI regulatory agency that would license, test, and screen AI models. This is an unprecedented act by a tech leader. Around the world, authorities are eager to tighten regulations related to AI and changes may be on the horizon.

In this article, legal dangers related to the use of generative AI will be discussed in five specific areas: confidentiality and data privacy, intellectual property, obligations to consumers, false information, and bias and discrimination.

Generative AI and Gibberish

Artificial intelligence generally refers to technology that utilizes data to perform tasks typically done by humans, such as analysis, pattern-recognition, and prediction. One particular subset of AI technology—generative AI—is responsible for the current cultural and corporate metamorphosis. Of the fleet of emerging generative AI products, ChatGPT has grabbed the greatest share of headlines. AI developer OpenAI released the online chatbot in November 2022, with bankrolling from Microsoft. The company launched an update, GPT-4, in March 2023.

ChatGPT has impressed—and even stunned—with its ability to create unique content that sounds convincingly human. OpenAI’s system and rival tools from Google and Bing are what AI developers call “large language models” (LLMs). Using a huge library of text data that includes books, articles, research papers, blogs, and social media posts, LLMs are “trained” to decode, analyze, and produce language.These AI applications can process and respond to a user’s prompts in an instant. They’re capable of handling requests that are far more sophisticated than simple web searches.

For instance, ChatGPT will eagerly respond to an essay question on the Roman Empire, craft a Shakespearean sonnet about any subject, suggest improvements to computer code, or devise a reply to your mother-in-law’s email. Other popular generative AI models can design graphic art, replicate voices, produce songs, or even put together a rudimentary sitcom episode. Many of these new tools are widely available online and at no charge, or with a relatively modest subscription fee.

An Overview of Select Legal Risks

The power of generative AI technology is already transforming the workforce, and in ways we never could have imagined just a year ago. LLMs like ChatGPT are now instantly finishing certain research, analysis, writing, or administrative tasks that would take hours for a human employee to complete. However, the risks associated with implementing generative AI tools are extensive and demand careful consideration. We are continuing to monitor developing elements of these risks as they unfold.

Continue reading “Client Alert: Friend or Foe? Legal Risks Arising From ChatGPT and Other Generative AI Software”

BG’s 2022 In Review

Passionately practicing law while doing good work for our clients and communities is at the heart of what we do here at BG.

In our “2022 In Review” newsletter, we highlight the work we’ve done for our valued clients (including a sneak peek of a couple of early 2023 successes), introduce our new partners and associates, and spotlight our pro bono work and diversity initiatives. Thank you for taking just a few moments to flip through its pages – we hope you enjoy it.

Click on the link here to open the newsletter in a beautiful magazine-style flippable format.

“If It Ain’t Broke, Don’t Fix It” – SCOTUS Examines Expanding the Attorney-Client Privilege for Dual Purpose Communications

Katherine E. Charonko and Elizabeth L. Stryker

The Supreme Court is currently considering a case that could expand the scope of the attorney-client privilege in the context of dual-purpose communications – such as, in this case, communications made to a law firm that also prepares tax returns. The question before the Court is: what is the appropriate test to determine whether a communication involving both legal and non-legal advice is protected by the attorney-client privilege? This case, In re Grand Jury, concerns documents that the Petitioner, a law firm specializing in tax law, claims are privileged. Petitioner asserts that these allegedly privileged materials concern tax law issues that arise upon expatriation from the United States and include legal advice regarding determining ownership of cryptocurrency assets, appropriate methods for asset valuation, and tax filing strategies. The Petitioner law firm also prepared filings for the client, an early promoter of bitcoin, including a certification of compliance with expatriation tax requirements. Continue reading ““If It Ain’t Broke, Don’t Fix It” – SCOTUS Examines Expanding the Attorney-Client Privilege for Dual Purpose Communications”
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