Recent Developments
The Financial Crimes Enforcement Network (FinCEN) has reinstated the beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA). Following recent court decisions, the deadline for compliance has been extended to March 21, 2025. This extension provides additional time for companies to file their initial, updated, or corrected BOI reports.
Background: How We Got Here
The CTA, bipartisan legislation enacted in 2021, aims to combat illicit activities such as tax fraud, money laundering, and terrorism financing by requiring certain U.S. businesses to disclose beneficial ownership information. The CTA has been the subject of many lawsuits. Several courts have held that the CTA is constitutional. However, a few courts initially granted injunctions prohibiting the enforcement of CTA, including, e.g., the U.S. District Court for the Eastern District of Texas in the cases of Texas Top Cop Shop, Inc. v. Bessent and Smith v. U.S. Department of the Treasury. These injunctions delayed the implementation of the BOI reporting requirements.
However, in early 2025, the Supreme Court stayed the nationwide preliminary injunction in Texas Top Cop Shop. Subsequently, other courts stayed the injunctions prohibiting enforcement. FinCEN has now confirmed its intention to proceed with the CTA’s requirements, extending the reporting deadline for most companies to March 21, 2025.
Updated Reporting Timelines
- New Entities: Newly formed nonexempt reporting companies must file their initial BOI reports within 30 days of formation.
- Updates to Prior Reports: Any updates to previously filed reports are due within 30 days of the change.
- Entities with Lapsed Deadlines: Companies with initial or updated reporting deadlines that passed during the injunction period now have until March 21, 2025, to file their BOI reports.
- Extensions: Companies that qualified for extensions, such as disaster relief, should adhere to their extended deadlines.
- Exemptions: Plaintiffs in National Small Business United v. Yellen, including members of the National Small Business Association as of March 1, 2024, currently are not required to report. But, note that the U.S. Government has asked this court to lift its injunction in light of the U.S. Supreme Court’s and other courts’ decisions.
What Comes Next?
FinCEN will consider further revisions to the BOI reporting requirement deadlines, potentially granting additional extensions for entities to file updates. FinCEN also plans to review and revise the CTA’s BOI reporting regulations in 2025 to reduce the burden on lower-risk entities, including many U.S. small businesses. Ongoing litigation and legislative actions may further impact future reporting requirements.
Key Takeaways:
- Extended Deadline: Most companies must report by March 21, 2025, to comply with the BOI reporting requirements.
- Compliance is Mandatory: Despite the previous extensions, companies should prepare to meet the new deadlines. Currently, there is no indication of further delays.
- Seek Professional Guidance: Given the complexities of the CTA, businesses are advised to consult with knowledgeable advisors, such as attorneys or accountants, to ensure compliance.
- Stay Informed: Continue to monitor updates from FinCEN and other relevant authorities for potential future developments.
