UPDATE - The Corporate Transparency Act

UPDATE - The Corporate Transparency Act

UPDATE – The Corporate Transparency Act - Reporting Requirements Back in Effect

On February 18, 2025, the U.S. District Court for the Eastern District of Texas granted the U.S. Department of Justice's motion to stay a universal injunction of the Corporate Transparency Act (CTA”)'s effective date. FinCEN subsequently issued a notice announcing that the beneficial ownership information reporting requirements are back in effect, subject to a 30-day extension. For most filers, that new deadline is March 21, 2025.

Separately, earlier in the month, a bill was passed in the U.S. House of Representatives that would extend the date to file initial beneficial ownership information reports with FinCEN to January 1, 2026, but only for reporting companies formed (or registered) before January 1, 2024. The bill is now in the Senate.  ISBA Business Law Update February 21, 2025. 

History of the CTA:

1. In 2021, Congress passed the CTA and set a January 1, 2025 deadline for businesses to file initial reports.
2. On December 3, 2024, the US District Court for the Eastern District of Texas issued a nationwide preliminary injunction which suspended the enforcement of the CTA in Texas Top Cop Shop, Inc. v. McHenry. This injunction relieved reporting companies of the obligation to file Beneficial Ownership Information reports (“BOI reports") just a few weeks before the January 1, 2025, compliance date. The deadline for compliance was also stayed.
3. On December 23, 2024, a motions panel of the 5^th Circuit overturned the injunction, reviving the CTA, and the government responded by postponing the BOI reporting deadline to January 13, 2025.
4. On December 26, 2024, another 5^th Circuit panel reinstated the nationwide injunction, citing the need to preserve the status quo while it reviews the substantive arguments submitted by the parties within the appeal.
5. On January 7, 2025, a district court judge in the Eastern District of Texas in another case (Smith v. U.S. Department of the Treasury) also ordered a stay of the FinCEN BOI reporting deadline during the pendancy of the lawsuit, based upon different facts and arguments.
6. On January 23, 2025, the U.S. Supreme Court granted the government's motion to stay the nationwide injunction issued by Texas Top Cop Shop, Inc. v. McHenry. Despite the Supreme Court's ruling, the BOI reporting requirements remain on hold due to the stay issued within the Smith v. U.S. Department of the Treasury case.

 

For additional information on CTA reporting requirements, see our previously published article “The Corporate Transparency Act” from January 19, 2024.