Beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) are once again back in effect. In the latest in a line of dizzying decisions surrounding the CTA, in Smith v. U.S. Department of the Treasury, the U.S. District Court for the Eastern District of Texas lifted the nationwide preliminary injunction, which had previously temporarily paused the reporting requirements.
FinCEN Updates Reporting Deadlines
Following this decision, the Financial Crimes Enforcement Network (FinCEN) issued an extension notice updating the deadlines for most companies required to file BOI reports under the CTA. The vast majority of reporting companies now have until March 21, 2025 to file their initial, updated, or corrected reports via FinCEN’s online database. This deadline does not apply to certain reporting companies that have been expressly granted a later reporting deadline, including companies granted certain disaster relief extensions and the plaintiffs in the case of United States v. Yellen currently challenging the CTA’s constitutionality.
FinCEN also stated in its extension notice that it plans to use this time to assess options to further modify CTA reporting deadlines and to initiate a process to revise reporting requirements that will reduce burdens on lower-risk entities. These potential changes to the CTA hinted by FinCEN, however, are currently unknown.
Recent Court Decisions and Ongoing Lawsuits
The Smith decision follows several other recent court decisions pausing and unpausing the CTA reporting requirements. In early December, the same U.S. District Court issued a nationwide preliminary injunction blocking the enforcement of the CTA in Texas Top Cop Shop, Inc., et al. v. Merrick Garland. In late December, a motions panel of the Fifth Circuit Court of Appeals stayed the preliminary injunction, restoring the reporting requirements. The Fifth Circuit then reinstated the injunction, but the Supreme Court of the United States stayed it in late January. A number of copycat lawsuits in other federal courts challenging the CTA are also currently pending.
What This Means for Reporting Companies
With the nationwide injunction in the Smith case lifted and no others in place, it is imperative that reporting companies prepare to file their BOI reports in advance of the March 21 deadline. Although changes to the CTA are possible, whether they come from FinCEN, Congress, or the courts, the March 21 deadline will be here quickly, and filings will be necessary to avoid penalties. If you have questions regarding the CTA or your company’s BOI reporting obligations, reach out to KJK’s CTA task force at CTA@kjk.com.
