Key takeaways:
- The nationwide preliminary injunctions that prevented enforcement of the CTA and the BOI reporting rule ordered by the district courts in the Eastern District of Texas have been lifted
- FinCEN issued guidance on February 19 indicating that beneficial ownership reporting requirements are back in effect, with a new deadline of March 21, 2025, for most companies
- FinCEN issued further guidance on February 27 saying that it will further extend the deadlines
On December 3, 2024, a federal district court in the case of Texas Top Cop Shop, Inc. v. Garland, No. 4:24-CV-478, entered an order enjoining enforcement of the Corporate Transparency Act (CTA) and its corresponding reporting rule.
The Government appealed, and on December 23, 2024, a motions panel of the U.S. Court of Appeals for the Fifth Circuit granted the Government’s emergency motion for a stay pending appeal.
On December 26, 2024, the Fifth Circuit vacated the stay that had been issued by the motions panel that had lifted the preliminary nationwide injunction. As a result, the CTA BOI reporting requirements went back to being voluntary, pending the appeal.
On January 7, 2025, in the case of Smith v. U.S. Department of Treasury, No. 6:24-cv-336, a different judge in the U.S. District Court, Eastern District of Texas, issued an order enjoining the Department of Treasury from enforcing the CTA against the plaintiffs and their related entities while their lawsuit is pending and ordered a nationwide stay of the effective date of FinCEN’s reporting rule that implements the CTA, while the lawsuit is pending.
On January 23, 2025, the U.S. Supreme Court lifted the nationwide injunction on the enforcement of the CTA that was issued by the court in Texas Top Cop Shop, Inc. v Garland.
On January 24, 2025, FinCEN issued guidance with respect to the U.S. Supreme Court’s ruling to lift the nationwide injunction. Because the separate nationwide order issued by the federal judge in Smith v. U.S. Department of Treasury remained in place, reporting companies were still not required to file beneficial ownership information with FinCEN.
On February 5, 2025, the Department of Justice, on behalf of the Department of Treasury, filed a notice of appeal of the district court’s order in Smith v. U.S Department of Treasury, and moved for a stay of the order, pending the Government’s appeal to the 5th Circuit.
On February 17, 2025, the U.S. District Court, Eastern District of Texas, in the case of Smith v. U.S. Department of Treasury granted the Government’s motion to stay the court’s January 7, 2025 order, thereby lifting the nationwide stay of the effective date of FinCEN’s beneficial ownership information (BOI) reporting rule, pending appeal.
On February 19, 2025, in response to the lifting of the Smith stay, FinCEN announced that BOI reporting requirements under the CTA are once again back in effect but with new deadlines.
The current deadlines announced on February 19 are as follows:
- For the vast majority of reporting companies, the new deadline to file an initial, updated, and/ or corrected BOI report is now March 21, 2025.
- Reporting companies that were previously given a reporting deadline later than the March 21, 2025 deadline must file their initial BOI report by that later deadline.
- Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv01448 (N.D. Ala.)—namely, Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024)—are not currently required to report their beneficial ownership information to FinCEN at this time.
On February 27, FinCEN provided further guidance:
- Penalties and fines will not be imposed for failures to file or update BOI reports by the current deadlines
- No later than March 21, 2025, FinCEN intends to issue an interim final rule that further extends BOI reporting deadlines
FinCEN’s announcements and alerts can be found on FinCEN’s website https://www.fincen.gov/
