Whiplash Redux - The Corporate Transparency Act is Back

The preliminary injunction in Smith, et al. v. U.S. Department of the Treasury that was still pausing any required filings by reporting companies under the Corporate Transparency Act (CTA) was lifted on February 17, 2025 by U.S. District Court Judge Kernodle (E.D. Texas).  This result was widely anticipated since the U.S. Supreme Court in Texas Top Cop Shop, Inc. had lifted the injunction in that case, making it difficult for any other court to take a contrary position with respect to injunctions related to the CTA.  These and other cases continue (just without the injunctions in place) as the parties continue to debate the constitutionality of the CTA. The courts in any of these cases could conclude that the CTA is unconstitutional, which would set off another round of appeals and uncertainty.

In response to the latest order in the Smith case lifting the injunction, the Financial Crimes Enforcement Network of the Department of the Treasury (FinCEN) posted on its website the following alert regarding the revival of filing requirements and deadline extensions for filing beneficial ownership information reports (BOIRs) and amendments to such reports. Please take note of the March 21, 2025 deadline. Be aware that there has been no guidance on the compliance requirements for new companies being formed now, which presumably are still bound by the requirement to do initial BOIRs within 30 days of formation, subject to any further changes the Department of the Treasury may still implement.

Alert: Ongoing Litigation – Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex.): Corporate Transparency Act reporting requirements back in effect [Updated February 19, 2025]

With the February 18, 2025, decision by the U.S. District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex.), beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) are once again back in effect. However, because the Department of the Treasury recognizes that reporting companies may need additional time to comply with their BOI reporting obligations, FinCEN is generally extending the deadline 30 calendar days from February 19, 2025, for most companies.

Notably, in keeping with Treasury’s commitment to reducing regulatory burden on businesses, during this 30-day period FinCEN will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks.

FinCEN also intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses.

Updated Deadlines

• 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. FinCEN will provide an update before then of any further modification of this deadline, recognizing that reporting companies may need additional time to comply with their BOI reporting obligations once this update is provided.
• 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. For example, if a company’s reporting deadline is in April 2025 because it qualifies for certain disaster relief extensions, it should follow the April deadline, not the March deadline.
• As indicated in the alert titled “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)”, 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.
• For updates on other litigation related to the Corporate Transparency Act and its effect on reporting requirements for certain plaintiffs, see alerts below.

For more information, see FinCEN Notice, FIN-2025-CTA1, FinCEN Extends Beneficial Ownership Information Reporting Deadline by 30 Days; Announces Intention to Revise Reporting Rule (February 18, 2025).

Reporting companies can report their beneficial ownership information directly to FinCEN, free of charge, using FinCEN’s E-Filing system available at https://boiefiling.fincen.gov. More information is available at fincen.gov/boi.

In the meanwhile, there is legislation pending to extend the deadline to file initial BOIRs for a year (until January 1, 2026) for companies formed prior to 2024 (which the House passed unanimously!). It is awaiting Senate action. Note that it did not provide any filing extensions for companies formed after 2024. Legislation has also been introduced in Congress to repeal the CTA altogether. 

So is the CTA fully recovered or still on life support?  We will all have to stay tuned.