Key Takeaways:
- The last remaining nationwide injunction blocking enforcement of the CTA has been stayed (lifted).
- BOI reporting is mandatory and the government may begin enforcing the CTA.
- The BOI report filing deadline is March 21, 2025.
- FinCEN may change filing deadlines to prioritize high-risk entities.
- The filing deadlines are subject to potential new court orders or congressional action.
On January 7, 2025, in Smith v. Treasury Department, the U.S. District Court for the Eastern District of Texas issued an order staying FinCEN’s regulations implementing the beneficial ownership information (“BOI”) reporting requirements, precluding the US Treasury Department’s Financial Crimes Enforcement Network (”FinCEN”) from requiring BOI reporting or otherwise enforcing the requirements of the Corporate Transparency Act (“CTA”).
On January 23, 2025, the US Supreme Court lifted an earlier temporary injunction on enforcement of the CTA which had been issued by a federal judge in Texas Top Cop Shop, Inc. v. McHenry. However, the Supreme Court’s order in Texas Top Cop Shop did not address the Smith injunction.
On February 5, 2025, the US Justice Department filed a notice of appeal of the Smith injunction and requested a stay of the order during the appeal. On February 18, 2025 the Smith court stayed (lifted) its injunction until the appeal is completed. As a result, BOI reporting under the CTA is now mandatory and the government may begin enforcing the CTA.
On February 19, 2025 FinCEN announced that the BOI filing deadline for the vast majority of companies will be March 21, 2025 and that FinCEN will provide an update before then of any further modification of this deadline. Reporting companies that have a reporting deadline which is later than March 21st deadline must file their report by the later deadline (for example, a reporting company incorporated on March 1, 2025 has until March 31, 2025 to file its initial report).
Reporting companies that have already filed their initial BOI reports should consider whether there have been any changes to either the identity of their beneficial owners or information regarding the beneficial owners or the company itself that require filing updated BOI reports. The deadline for filing updated BOI reports will be the latter of March 21, 2025 and thirty days from the date of the change triggering the need for a new filing.
Congress is considering legislation ranging from scrapping the CTA altogether to extending the filing deadlines. The House of Representatives passed a bill that would extend the filing deadline for pre-2024 reporting companies until January 1, 2026 it if becomes law and similar legislation is being considered by the Senate.
Over the past few months, the CTA has been the subject of a flurry of litigation, court orders, and congressional activity. Despite the lifting of the Smith injunction and the ruling of the Supreme Court in Texas Top Cop Shop, the possibility of a court issuing a new nationwide injunction before the new filing deadlines cannot be ruled out. Neither can the possibility that Congress will act to change the filing deadline or, though less likely, repeal the CTA altogether.
We recommend that reporting companies which have not previously filed their initial BOI reports be prepared to do so by March 21, 2025, and that reporting companies that have filed their BOI reports but have experienced reportable changes be prepared to file new reports by the latter of March 21, 2025, and 30 days from the date such reportable change occurred. Reporting companies should continue to monitor developments related to the CTA and be prepared to act accordingly.
This update is intended to bring recent CTA developments to your attention and is provided for informational purposes only and does not serve to replace professional legal advice.
