The Corporate Transparency Act Is Back – Deadline To File Extended
2.24.2025
On February 18, 2025, the United States District Court for the Eastern District of Texas lifted the remaining nationwide injunction on the enforcement of the Corporate Transparency Act’s (CTA) beneficial ownership reporting requirements (Smith, et al. v. U.S. Department of the Treasury, et al. (E.D. Tex.).) Despite the United States Supreme Court granting the government’s motion to stay the nationwide injunction issued by a different court in the same United States District in Texas, which you can read more about here,[1] the Smith injunction continued to halt the U.S. Treasury’s Financial Crimes Enforcement Network’s (FinCEN) enforcement of the CTA – until now.
Beneficial owners are those that own 25% or more of the reporting company, or exercise substantial control over the entity. Unless the reporting company falls into one of the twenty-three exemptions set forth in the CTA, the entity is required to submit a beneficial ownership information (BOI) report to FinCEN.
Current Requirements
FinCEN has acknowledged the Smith decision and reiterated its commitment to enforcement of the CTA. The new deadline for submitting initial, updated, or corrected BOI reports to FinCEN is March 21. However, reporting companies that were previously provided with a reporting deadline later than the March 21 can file their initial beneficial ownership report by that later deadline.
Newly formed entities, which by definition are business entities formed or organized on or after Jan. 1, 2025, must file their BOI report within thirty days of the entity’s formation or organization. FinCEN advised that it may adjust deadlines for reporting companies deemed low-risk to national security. FinCEN has not advised what they consider “low-risk,” nor any abridged protocol for such entities.
Non-exempt reporting companies can submit their BOI reports directly to FinCEN, free of charge, using FinCEN’s e-filing system. Failure to comply with the CTA reporting obligations can result in civil and criminal penalties, including civil penalties of up to $591 per day (adjusted annually for inflation) and criminal penalties of up to $10,000 and/or up to two years imprisonment.
Legal Challenges and Support
The CTA continues to faces numerous legal hurdles (and some support) throughout the country. On Feb. 10, 2025, the U.S. House of Representatives passed H.R.736, a bipartisan bill, which, if passed by the U.S. Senate and signed by the president, would extend the compliance deadline for pre-2024 reporting companies (previously obligated to file by Jan. 1, 2025) to Jan. 1, 2026.
On Feb. 14, 2025, the United States District Court for the District of Maine ruled that the CTA is constitutional under the Commerce Clause of the U.S. Constitution (Boyle v. Bessent, et al. (D. Me.)). Since the CTA was signed into law, various federal courts around the country, including in Alabama and Oregon, have also weighed in on the constitutionality and therefore, enforceability of the CTA.
Notably, oral arguments in the Fifth Circuit McHenry v. Texas Top Cop Shop, Inc. (E.D. Tex.) case, which you can read more about here,[2] are scheduled for March 25, 2025. Therefore, the Fifth Circuit’s decision will not be issued prior to FinCEN’s extended March 21, 2025 deadline.
Endnotes:
[1] Hyperlink: https://nysba.org/corporate-transparency-act-receives-support-from-scotus-but-its-not-enough-to-lift-nationwide-injunction/?srsltid=AfmBOooC5ogex9e2LCigPDuUMBwKiTtodsREICSp6_Etc86zhf6OY_hY
[2] Hyperlink: https://nysba.org/corporate-transparency-act-receives-support-from-scotus-but-its-not-enough-to-lift-nationwide-injunction/?srsltid=AfmBOooC5ogex9e2LCigPDuUMBwKiTtodsREICSp6_Etc86zhf6OY_hY
