The CTA is Back in Play, with a Slight Extension

UPDATE 02.20.2025

CTA Update – On Tuesday, February 18, 2025, the US District Court for the Eastern District of Texas stayed its order from January 7, 2025, which provided a nationwide injunction on the CTA’s enforcement. This means the BOI reporting requirements under the CTA are once again mandatory. FinCEN followed this ruling up by issuing a Notice regarding the enforceability of BOI reporting and set a new deadline for reporting companies formed before January 1, 2024. The new deadline to file an initial, updated, and/or corrected BOI report for these reporting companies is now March 21, 2025 (unless a later deadline applies).

Interestingly, FinCEN also mentioned in its Notice it will assess its options to further modify deadlines, as well as “initiate a process to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses.” Additional context was not given to clarify who may be a “lower-risk entity” or what revisions would reduce their burden. We’ll continue to monitor the status of the CTA and provide updates when available.

UPDATE 01.24.2025

CTA UPDATE -  On January 23, 2025, the U.S. Supreme Court lifted the nationwide injunction that had previously blocked the enforcement of the Corporate Transparency Act (CTA) (Texas Top Cop Shop, Inc. v. McHenry). The Supreme Court’s action stays the injunction, permitting the CTA’s enforcement while legal challenges continue. However, despite the Supreme Court’s decision, the implementation of the CTA remains in limbo due to a second nationwide injunction granted by another district court judge in Texas (Smith v. U.S. Department of Treasury).

In response to the Supreme Court’s ruling, the Financial Crimes and Enforcement Network (FinCEN) issued an update stating reporting companies are not subject to liability if they fail to file BOI information while the Smith order remains in force. Companies may file if they choose to do so.

We’ll continue to monitor for procedural updates and whether the reporting obligations are back in effect.

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UPDATE 12.27.2024

BREAKING: The Fifth Circuit has vacated a portion of its December 23 order which reinstated the CTA’s reporting obligations. As of now, reporting companies are no longer subject to the CTA’s reporting obligations while the Fifth Circuit expedites a decision on the constitutionality of the law. Stay tuned for further updates to come.

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On Monday, December 23, the United States Court of Appeals for the Fifth Circuit revived the immediate enforceability of the Corporate Transparency Act (CTA). In Texas Top Cop Shop, Inc. v. Garland, the Fifth Circuit stayed the lower court’s nationwide preliminary injunction against the CTA, which was issued on December 3, 2024.

Later that day, FinCEN responded to the Fifth Circuit’s order by issuing an advisory extending the reporting deadline as follows:

• Reporting companies that were created or registered prior to January 1, 2024, have until January 13, 2025, to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)

• Reporting companies created or registered in the United States on or after September 4, 2024, that had a filing deadline between December 3, 2024, and December 23, 202,4 have until January 13, 2025, to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report within 90 days from the date they were created or registered.)

• Reporting companies created or registered in the United States on or after December 3, 2024, and on or before December 23, 2024, have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report within 90 days from the date they were created or registered.)

• Reporting companies that are created or registered in the United States on or after January 1, 2025, have 30 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.

There are several anticipated challenges to this latest ruling, so please stay tuned!