Corporate Transparency Act Enforcement Back On

Current Developments

On December 23, 2024, the United States Court of Appeals for the Fifth Circuit stayed the nationwide injunction previously issued by the U.S. District Court for the Eastern District of Texas earlier this month in Texas Top Cop Shop, Inc. v. Garland. The injunction had barred enforcement of the Corporate Transparency Act (CTA) and the Beneficial Ownership Information Reporting Rule (BOI). As a result of the Fifth Circuit’s stay, entities subject to the CTA are once again required to comply with the reporting obligations under the CTA. While the original deadline for reporting companies formed before January 1, 2024, to file the BOI report was December 31, 2024, the injunction has extended the compliance deadline to January 13, 2025.

As outlined in a recent article published by our team at Hoge Fenton, the CTA, which took effect on January 1, 2024, mandates that certain corporations, limited liability companies, limited partnerships, and other entities formed or registered to do business in the U.S.—unless exempt from the CTA’s filing requirements—disclose information about their beneficial owners to the U.S. Financial Crimes Enforcement Network (FinCEN) within specified deadlines.

On December 3, 2024, a U.S., District Court ruling in Texas Top Cop Shop, Inc. v. Garland temporarily halted enforcement of the CTA, including its filing deadlines, on the grounds that the law is likely unconstitutional due to overreach beyond Congressional authority. However, the Fifth Circuit has stayed the District Court’s injunction pending an appeal on the merits and, as a result, reporting companies are once again required to comply with the CTA’s BOI reporting obligations.

FinCEN Reporting Deadlines

With the original December 31, 2024, BOI reporting deadline for reporting companies rapidly approaching, FinCEN has announced an extension of the deadlines for businesses to submit their BOI reports, as follows:

• Reporting companies subject to BOI reporting and formed or registered to do business in the United States prior to January 1, 2024, now have until January 13, 2025, to file their initial BOI reports with FinCEN.
• Reporting companies subject to BOI reporting that were formed or registered to do business in the United States on or after September 4, 2024, and had a filing deadline between December 3, 2024, and December 23, 2024, have until January 13, 2025, to file their initial BOI reports with FinCEN.
• Reporting companies subject to BOI reporting and formed or registered to do business in the United States on or after December 3, 2024, but on or before December 23, 2024, have an additional 21 days from their original filing deadline to submit their initial BOI reports with FinCEN.
• Reporting companies subject to BOI reporting and formed or registered to do business in the United States on or after January 1, 2025, will have 30 days to file their initial BOI reports with FinCEN (as opposed to the 90 days provided to those created in 2024).

Next Steps

Although the Fifth Circuit has issued a stay on the preliminary injunction, the litigation is still ongoing, and the court has not yet issued a formal ruling on the constitutionality of the CTA.

In the interim, with the BOI reporting requirements reinstated, entities should promptly evaluate their applicability under these obligations. Those subject to the requirements should ensure timely preparation and submission of BOI reports to FinCEN in advance of the relevant deadlines.

Clients and reporting companies should remain vigilant for further updates from Hoge Fenton, as any new developments or rulings could affect their compliance obligations under the CTA. Our team at Hoge Fenton will continue to diligently monitor Texas Top Cop Shop and other related cases concerning the CTA, ensuring you receive timely updates on any significant developments.