Lastest update March 1, 2025
On February 27, 2025, FinCEN announced that companies that do not file or update their beneficial ownership information (BOI) reports pursuant to the Corporate Transparency Act (CTA) by the current deadlines—March 21, 2025, for most companies—will not be fined or penalized. In addition, no later than March 21, 2025, FinCEN intends to issue an interim final rule that extends BOI reporting deadlines. FinCEN also intends to solicit public comment on potential revisions to existing BOI reporting requirements.
On February 17, 2025, in Smith v. U.S. Department of the Treasury, No. 6:24-cv-00336 (E.D. Tex. Feb. 17, 2025), the US District Court for the Eastern District of Texas stayed the nationwide injunction it had issued January 7, 2025, halting enforcement of the Beneficial Ownership Information (BOI) Reporting Rule implementing the Corporate Transparency Act (CTA) in light of the US Supreme Court’s January 23, 2025, order in Texas Top Cop Shop v. McHenry (formerly Texas Top Cop Shop v. Garland). In Texas Top Cop Shop, the US Supreme Court stayed the preliminary injunction blocking enforcement of the CTA pending disposition of the appeal in the Fifth Circuit Court of Appeals and disposition of the petition for the writ of certiorari. Oral arguments are scheduled for March 25, 2025, in the Texas Top Cop Shop case.
AFTER THE SUPREME COURT ORDER, FinCEN issued an announcement that reporting companies are once again required to file BOI reports. For most reporting companies, the new deadline to file an initial, updated, or corrected BOI report is March 21, 2025. However, several other district court cases involving the CTA are currently on appeal in various circuit courts of appeals. (Cmty. Ass’n Inst. v. Yellen, No. 24-2118 (E.D. Va. Oct. 24, 2024) (4th Cir.); Firestone v. Yellen, No. 24-6979 (D. Or. Sept. 20, 2024) (9th Cir.); Nat’l Small Bus. United v. Yellen, No. 24-10736 (N.D. Ala. Mar. 1, 2024) (11th Cir.).) FURTHER, on January 15, 2025, the Repealing Big Brother Overreach Act was reintroduced in the US Senate and House of Representatives. If enacted, the bill would repeal the CTA. In addition, on February 10, 2025, the House of Representatives passed the Protect Small Businesses from Excessive Paperwork Act of 2025, which, if enacted, would extend the deadline for filing BOI reports to January 1, 2026. WealthCounsel members may visit the CTA page on the member website for additional information and updates.
We will continue to update this page.
Lastest update as of January 25, 2025: FROM FIN/CEN BOI WEBSITE:
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.
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On January 23, 2025, the Supreme Court granted the government’s motion to stay a nationwide injunction issued by a federal judge in Texas (Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland). As a separate nationwide order issued by a different federal judge in Texas (Smith v. U.S. Department of the Treasury) still remains in place, reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.
Update December 27, 2024: On December 3, 2024, in Texas Top Cop Shop, Inc. v. Garland, No. 4:24-cv-00478 (E.D. Tex. Dec. 3, 2024), the United States District Court for the Eastern District of Texas entered a nationwide preliminary injunction blocking the enforcement of the Corporate Transparency Act and its implementing regulations. See the court’s opinion here. On December 23, 2024, the Fifth Circuit Court of Appeals issued a stay of the preliminary injunction in the Texas Top Cop Shop case.
THEN, on December 26, 2024, a different panel of the U.S. Court of Appeals for the Fifth Circuit issued an order vacating the Court’s December 23, 2024 order granting a stay of the preliminary injunction. Accordingly, as of December 26, 2024, the injunction issued by the district court in Texas Top Cop Shop, Inc. v. Garland is in effect and reporting companies are not currently required to file beneficial ownership information with FinCEN.
UPDATE, December 7, 2024. Federal District Court Judge Mazzant on December 4 issued in opinion in Texas Top Cop Golf v. Garland, finding that Congress lacked the authority under the Commerce Clause or the Necessary and Proper Clause to enact the CTA. On that basis, he granted a nationwide injunction against enforcement of the CTA and against the Reporting Rule. The effect, if the order remains in effect, is that all deadlines for compliance under the CTA are stayed and the CTA and the Reporting Rule will not go into effect unless and until Judge Mazzant’s order is reversed.
The order followed oral argument in the NSBA v. Yellen case, discussed below, at the Eleventh Circuit. The Eleventh Circuit has not issued any opinion or order relating to the appeal.
We will continue to update and monitor if we can. Judge Mazzant noted the significant potential and criminal penalties under the CTA, and that along with the loss of privacy that will result if the Reporting Rule is not stayed, persuaded him to enter a nationwide injunction.
NSBA v. Yellen, N.D. Alabama case: CTA is unconstitutional.
On March 1, 2024, the federal judge presiding over NSBA v. Yellen, which questions the constitutionality of the Corporate Transparency Act (CTA), struck down the CTA as unconstitutional. However, the summary judgment order only imposed an injunction against enforcement by the government against the plaintiffs in that case. The CTA imposes mandatory reporting obligations on millions of small businesses operating throughout the US, ostensibly to enhance corporate transparency and combat financial crime. However, the court did not enter an injunction
The CTA, which took effect on January 1, 2024, requires a wide range of companies to provide personal information about their beneficial owners and company applicants to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). More than 32.5 million existing small and larger business entities appear to be subject to the CTA. This number includes many, if not most, small businesses operated in every U.S. state. By mid-February, approximately a half million reports had been filed under the CTA.
In National Small Business United d/b/a National Small Business Association v. Yellen, Judge Liles C. Burke of the United States District Court for the Northern District of Alabama held that the CTA exceeded Congress’s authority to regulate interstate commerce, and that the CTA was not necessary to the proper exercise of Congress’ power to regulate foreign affairs or its taxing power. The Court declared the CTA unconstitutional and issued an injunction prohibiting the federal government from enforcing the CTA’s reporting requirements against the plaintiffs in that case.
In its order, the Court noted that the CTA imposes requirements on corporate formation, which is a matter of internal state law. Further, the Court observed that the CTA applies to entities even if the entity conducts purely intrastate commercial activities or no commercial activities at all. Third, the Court concluded that the CTA’s disclosure requirements could not be justified as a data-collection tool for tax officials, because that would give FinCEN “unfettered legislative power.”
The Court’s decision creates uncertainty regarding reporting obligations under the CTA. Although the Court purported to limit its injunction to the parties in the litigation before it, the lead plaintiff in the suit is the National Small Business Association (NSBA). However, the Court held that the NSBA had associational standing to sue on behalf of its members. Thus, the Court’s injunction likely benefits all of the NSBA’s over 65,000 members.
Regardless of membership in the NSBA, however, the Court’s finding that the CTA is unconstitutional also raises serious doubts about the government’s ability to enforce the CTA’s reporting requirements against any business. The order may result in a de facto moratorium on CTA enforcement pending a final order.
The government will likely appeal this decision, but the Court’s injunction and declaration will remain in effect unless a stay is granted. If the district court denies a stay, the government will be able to seek a stay from the Atlanta-based United States Court of Appeals for the Eleventh Circuit. It may take over a year for a final order. However, tens of millions of companies are required to report under the CTA no later than January 1, 2025.
MWR 1/25/25
