In the latest in a series of back-and-forth developments, the Corporate Transparency Act (CTA) is once again enforceable following a federal district court decision, with the Financial Crimes Enforcement Network (FinCEN) extending the beneficial ownership information (BOI) reporting deadline to March 21, 2025, for most reporting companies.
The enforcement of the BOI reporting requirements had previously been halted due to an order from a federal district court in the Eastern District of Texas in Smith et al. v. US Department of the Treasury et al. That court has now issued a stay of that order pending appeal. Following this decision, on February 19, FinCEN announced updated filing deadlines:
- For the vast majority of companies that are required to file new, updated or corrected BOI reports, the filing deadline is now March 21, 2025.
- For companies that were subject to filing deadlines that are later than March 21, 2025 (e.g., because of disaster relief extensions), the later filing deadline will apply.
- Different requirements also may apply to companies that are parties to other lawsuits challenging the CTA.
Challenges to the constitutionality of the CTA remain pending before the courts, and further developments in litigation – or further action from FinCEN or Congress – may affect the BOI reporting requirements. In particular, the US House of Representatives passed HR 736, which, for companies formed or registered before January 1, 2024, would extend the BOI reporting deadline to January 1, 2026. A related bill (S 505) also was introduced in the US Senate.
FinCEN also indicated that it will assess its options to modify further deadlines or reporting requirements for lower-risk entities, and it may further modify the March 21 deadline. However, it is not known whether any of these potential developments or modifications will come to pass and, with the March 21 deadline now approaching, entities should assess whether they are covered by these reporting requirements – and, if required, complete and prepare to file BOI reports with FinCEN ahead of the applicable deadline.
To recap certain earlier developments in CTA litigation:
- On December 3, 2024, in Texas Top Cop Shop, Inc. et al. v. Garland et al., the US District Court for the Eastern District of Texas issued a nationwide preliminary injunction against enforcement of the CTA’s reporting requirements, pending resolution on the merits of constitutional challenges brought against the CTA.
- On December 23, a panel of the US Court of Appeals for the Fifth Circuit issued a stay pending appeal of that preliminary injunction, putting the BOI reporting requirements back in effect.
- On December 26, the Fifth Circuit vacated the stay that was issued on December 23, once again pausing the reporting requirements.
- On January 7, 2025, a different court in the Eastern District of Texas issued an order in the Smith case staying the effective date of the BOI reporting requirements.
- Following the December 26 order of the Fifth Circuit, the US government filed an emergency application to the US Supreme Court seeking a stay of the preliminary injunction in the Texas Top Cop Shop case, which the Supreme Court granted on January 23. However, the enforcement of the BOI reporting requirements remained on hold until now as a result of the January 7 order in the Smith
More information regarding the CTA, including on topics such as what companies need to report and how to identify beneficial owners, is covered in this Cooley GO article.
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