On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit (“Fifth Circuit”) granted the U.S. Government’s motion to stay the nationwide preliminary injunction issued by U.S. District Court for the Eastern District of Texas (“District Court”) on December 3, 2024, which temporarily halted the enforcement of the Corporate Transparency Act (CTA).
This decision reinstates mandatory reporting requirements for millions of companies created or registered in the U.S. In response to the Fifth Circuit order, the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”), which is responsible for implementing and enforcing the CTA, issued revised deadlines for the filing of Beneficial Ownership Information Reports (“BOIRs”).
What You Need to Know
The nationwide preliminary injunction issued by the District Court has been stayed, and all nonexempt entities created or registered in the U.S. must file BOIRs. However, in an alert following the Fifth Circuit decision, FinCEN announced the following new deadlines to accommodate entities that may have relied on the District Court’s nationwide injunction:
- Reporting companies created or registered before January 1, 2024, and initially required to file by January 1, 2025, are now required to file initial BOIRs on or before January 13, 2025.
- Reporting companies created or registered on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial BOIRs.
- Reporting companies created or registered on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their initial filing deadline to file their initial BOIRs.
- Reporting companies created/registered on or after January 1, 2025 must file initial BOIRs within 30 days after receiving actual or public notice that their creation or registration is effective. Reporting companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025. These companies should abide by whichever deadline falls later.
Effect of the New Deadlines in a Nutshell
In short, although somewhat confusing, the revised filing deadlines apply to all reporting companies created or registered before January 1, 2024 and all reporting companies that received actual or public notice on or after September 4, 2024 but before December 24, 2024, that their creation or registration was effective. For example, if a reporting company was created on September 3, 2024 (and received actual or public notice on that date that its creation or registration was effective), it would not have been affected by the injunction because its initial BOIR would have been due on December 2, 2024, the day before the injunction went into effect. Likewise, reporting companies created after December 23, 2024, when the injunction was lifted, were not affected by the injunction. So, for example, a reporting company formed on December 24, 2024, would have the normal 30 days after that date (assuming it received actual or public notice on that date that its creation or registration was effective) within which to file its initial BOIR, or until January 22, 2025. As another example, if a reporting company was created on December 5, 2024, and received actual or public notice on that date that its creation was effective on that date, it should be deemed to have until January 25, 2025 to file its initial BOIR (30 days plus an additional 21 days).
Background
As outlined in an earlier post, the CTA took effect on January 1, 2024, and requires certain entities created or registered to do business in the U.S. and not otherwise exempt from the CTA’s filing requirements to disclose information about their beneficial owners to FinCEN within specified filing deadlines.
For existing entities — those created or registered before January 1, 2024 — the CTA’s implementing rules set a filing deadline of January 1, 2025. Entities created or registered during calendar year 2024 are required to file within 90 days of the date of creation or registration, and entities created or registered on or after January 1, 2025 are required to file within 30 days of formation or registration.
The CTA has been subject to challenges throughout the year, and on December 3, 2024, the District Court (E.D. Texas) in Texas Top Cop Shop, Inc. v. Garland issued a nationwide preliminary injunction barring enforcement of the CTA (including its filing deadlines). The Fifth Circuit has now stayed the District Court injunction and ordered an expedited appeal. The practical effect of this decision is a reinstatement of the CTA filing deadlines, subject to revisions issued by FinCEN.
It is unknown at this time whether a further appeal will be taken or whether, assuming that the appeal would be to the Supreme Court, the Court would entertain an appeal.
Saul Ewing’s CTA Team will continue to monitor this, and other cases relating to CTA compliance and will provide relevant updates as they become available.
