Current Status of Corporate Transparency Act - Revived by the Supreme Court

Short guidance: As of February 19, 2025, FinCEN/The Treasury Department has taken the position that businesses subject to the Corporate Transparency Act (CTA) must filed the Beneficial Ownership Information Reports by March 21, 2025, but there are a lot of caveats in FinCEN’s guidance, and changes/further extensions made be made by the filing date. (Updated February 19, 2025)

On February 19, 2025, FinCEN released this statement: https://fincen.gov/sites/default/files/shared/FinCEN-BOI-Notice-Deadline-Extension-508FINAL.pdf. FinCEN is taking the position that BOI reports are back in effect and U.S. businesses subject to the CTA must comply by March 21, 2025. However, the notice also says “FinCEN will provide an update before then of any further modification of this deadline,” which strongly indicates another extension is on the horizon.

On January 23, 2025, the Supreme Court revived the CTA. The order can be found here: https://www.supremecourt.gov/opinions/24pdf/24a653_c07d.pdf. The Supreme Court held:

The application for stay presented to JUSTICE ALITO and by him referred to the Court is granted. The December 5, 2024 amended order of the United States District Court for the Eastern District of Texas, case No. 4:24–cv–478, is stayed pending the disposition of the appeal in the United States Court of Appeals for the Fifth Circuit and disposition of a petition for a writ of certiorari, if such a writ is timely sought.

This means that the district court’s December 3, 2024 decision that instituted a nationwide injunction on CTA reporting has been overturned. It will now be sent back to the Fifth Circuit for a third judge panel to fully consider the constitutionality of the CTA. It is also possible that the Trump Administration will go in a different direction (which wouldn’t be completely ridiculous since one of the amicus briefs filed in the Supreme Court was from many of the States Trump won in the 2024 election).

Please stay tuned to this post for updates.

Longer version (for those of you who are interested in the legal ping pong that has happened recently):

The CTA was enacted by Congress in 2021 as part of the National Defense Authorization Act, and is mostly aimed at combatting illegal financial activities, such as money laundering, tax, fraud, terrorist financing, etc. The CTA essentially requires many U.S. businesses to disclose detailed ownership information to the U.S. Treasury Department so business owners can no longer remain anonymous and/or hide behind shell companies. It came into full effect on January 1, 2024.

The CTA requires businesses created before 2024 to submit information about the beneficial owners and principal decisionmakers, including names, addresses, date of birth, and provide a scanned version of identification (driver’s license, passport, etc.) on or before December 31, 2024. Business created during 2024 had 90 days to comply. As expected, there were multiple legal challenges to the CTA, which had been making their way through the various U.S. courts over the past year. Here is (some) of the relevant court decisions and proceedings:

March 1, 2024 - The U.S. District Court for the Northern District of Alabama granted a preliminary injunction for the plaintiffs in National Small Business United et al. v. Yellen at al., No. 522-cv-01448, holding that the CTA was likely unconstitutional. However, the Court enjoined the U.S. Treasury Department from enforcing the CTA against the plaintiffs, only. Non-parties still needed to comply and report. The Treasury Department appealed this decision, and the U.S. Court of Appeals for the Eleventh Circuit is considering the appeal, having held oral argument on September 27, 2024.

December 3, 2024 - Judice Amos L. Mazzant, III of the U.S. District Court for the Eastern District of Texas in Texas Top Cop Shop v. Garland, No. 4:24-cv-478, held the CTA was unconstitutional and granted a nationwide injunction, including non-parties. The U.S. Government defendants immediately appealed this decision.

December 23, 2024 - (Texas case) The Fifth Circuit motions panel (i.e., a third-judge panel that heard the emergency appeal) overturned the district court’s decision and reinstated the CTA (temporarily as it turns out). Later that day, the U.S. Treasury Department released guidance to U.S. business owners delaying the compliance date under the CTA to January 13, 2025. The plaintiffs immediately asked the entire Fifth Circuit to hear the case (i.e., hearing “en banc”).

December 26, 2024 - (Texas case) Prior to any decisions on the en banc request, the Fifth Circuit merits panel (i.e., the three-judge panel that will hear the substantive aspects of the full appeal) reversed course, keeping the December 3, 2024 preliminary injunction intact. As of December 27, 2024, this is the operative decision for business owners, which means that business owners currently do not need to comply with the CTA.

December 27, 2024 - (Texas case) Fifth Circuit issued a briefing schedule on the merits of the appeal for February 2025. Plaintiffs/Appellants' briefs due 2/7/2025; U.S. government opposition due 2/21/2025; reply brief due 2/28/2025. Oral argument scheduled for 3/25/2025. Although nothing is a guarantee, it appears the injunction is going to stay in place for at least Q1 2025, likely longer, unless there are more emergency appeals.

December 31, 2024 - (Texas case) The U.S. Government applied to the U.S. Supreme Court for a stay of the District Court’s injunction pending appeal

January 2, 2025 - FinCEN has put an alert on their website that states: “In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”

January 7, 2025 - (Smith Texas case) The U.S. District Court for the Eastern District of Texas released a decision that pauses the reporting rule implementing the CTA.

January 23, 2025 - (Texas case) The U.S. Supreme Court grants the U.S. Government 12/31/2024 request for a stay, overturning the District Court’s injunction.

February 18, 2025 - (Smith Texas case) The U.S. District Court of Texas in Smith v. U.S. Dep’t of Treasury releases a decision staying its January 7, 2025 order.

February 19, 2025 - FinCEN releases a notice (a copy can be found here: https://fincen.gov/sites/default/files/shared/FinCEN-BOI-Notice-Deadline-Extension-508FINAL.pdf), which extends the reporting deadline for all reporting companies until at least March 21, 2025, and strongly hinted that it may modify or extend the deadline further.