Corporate Transparency Act Reinstated
Earlier this week, a federal district court in Texas lifted the last remaining nationwide injunction blocking enforcement of the Corporate Transparency Act (CTA). As a result, the CTA has been reinstated, effective immediately. The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) responded to the Court’s decision by announcing extended filing deadlines for the beneficial ownership information (BOI) report required by the CTA. For the vast majority ofreporting companies, those reports are now due by March 21, 2025.
What happened in the case?
On January 7, 2025, the U.S. District Court for the Eastern District of Texas issued an order temporarily halting the implementation of FinCEN’s regulations related to BOI reporting, effectively preventing FinCEN from enforcing the CTA. On February 5, 2025, the U.S. Department of Justice, representing the Treasury Department, filed an appeal of the district court’s decision and requested a stay (i.e., pause) of the order during the appeal process.
On February 18, 2025, the district court agreed to suspend its January 7, 2025 order until the appeal is resolved. As a result, FinCEN’s regulations implementing the BOI reporting requirements of the CTA are no longer stayed. The Treasury Department, by and through FinCEN, is now free to resume enforcement of the CTA’s BOI reporting requirements.
What is the new deadline?
The new deadline for most reporting companies to file their initial, updated, and/or corrected BOI reports is now March 21, 2025.
Reporting companies previously given a reporting deadline later than March 21, 2025, are required to file their initial BOI report by that later deadline. This narrow reporting company category includes business extensions resulting from certain natural disasters. These extensions are unlikely to affect Pennsylvania residents unless a Pennsylvania resident owns or controls a reporting company organized and/or operating in an impacted area.
What else can change?
If we have learned anything about the CTA, it is to expect the unexpected. Though no injunctions are preventing the law from being enforced, the cases in which the previously issued injunctions were entered are still on appeal. It is possible one of those cases will result in the CTA being permanently invalidated. It is also possible that Congress or the current Administration will take some action to either modify the law or repeal it altogether. We simply do not know.
What we do know is that FinCEN is considering additional modifications to the current deadlines. In a press release dated February 18, 2025, FinCEN issued the following statement:
Notably, in keeping with Treasury’s commitment to reducing regulatory burden on businesses, during this 30-day period FinCEN will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks. FinCEN also intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses.
Clearly, this situation remains fluid. For the time being, however, the CTA remains in full force and effect. Unless and until something changes, all reporting companies need to comply with the newly-established March 21, 2025 deadline.
Why You Should Act Now
While FinCEN’s extended filing deadline provides extra time, businesses should prioritize submitting their reports as soon as possible to avoid potential penalties. With the risk of further changes to deadlines, now is the time to ensure your company is in compliance.
Takeaway
If your business is required to file a BOI report under the CTA, be sure to submit your information to FinCEN by March 21, 2025, to avoid penalties. Businesses can file directly through FinCEN’s e-filing system, which is free of charge.