Highlights
- The U.S. District Court for the Eastern District of Texas granted a stay of its earlier injunction that suspended enforcement of the Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) reporting rule
- FinCEN is once again permitted to enforce reporting obligations under the CTA to file BOI reports
- FinCEN providing a 30-day extension of BOI reporting deadline to March 21, 2025
Continuing a series of rapid-fire legal developments regarding the Corporate Transparency Act (CTA), on Feb. 18, 2025, the U.S. District Court for the Eastern District of Texas issued a stay of its own Jan. 7, 2025 injunction prohibiting the Financial Crimes Enforcement Network’s (FinCEN) implementation of Beneficial Ownership Information (BOI) reporting requirements, which precluded FinCEN from requiring BOI reporting or otherwise enforcing the CTA’s requirements.
As a result of the new stay, reporting obligations and deadlines under the CTA can be enforced by FinCEN.
FinCEN issued a Feb. 18 notice updating the BOI report filing deadlines, including an initial BOI report filing deadline of March 21, 2025. FinCEN clarified its various deadlines as follows:
- For the vast majority of reporting companies, the new deadline to file an initial, updated, and/or corrected BOI report is now March 21, 2025.
- Reporting companies previously given a reporting deadline later than the March 21, 2025, deadline are required to file their initial BOI report by such later deadline. For example, if a company’s reporting deadline was extended to April 2025 as a result of certain disaster relief extensions, it should continue to follow the April deadline.
- Plaintiffs in National Small Business United v. Yellen are not currently required to report their beneficial ownership information to FinCEN.
FinCEN summarized the impact of the newest stay as follows: “Given this decision, FinCEN’s regulations implementing the BOI reporting requirements of the CTA are no longer stayed. Thus, subject to any applicable court orders, BOI reporting is now mandatory, but FinCEN is providing additional time for companies to report.” FinCEN is empowered to enforce the CTA, its BOI reporting rule and all applicable deadlines until the pending appeal is completed.
To recap recent developments:
- Dec. 3, 2024 – The U.S. District Court for the Eastern District of Texas issued a nationwide injunction enjoining enforcement of the CTA, suspending all reporting obligations under the act (Texas Top Cop Shop, Inc. v. McHenry – formerly, Texas Top Cop Shop v. Garland). This order was amended Dec. 5, 2024.
- Dec. 23, 2024 – The motions panel of the U.S. Court of Appeals for the Fifth Circuit granted a stay of the district court injunction. The stay by the Court of Appeals restored initial reporting deadlines for reporting companies. FinCEN responded by issuing an alert extending initial reporting deadlines.
- Dec. 26, 2024 – The merits panel of the Fifth Circuit vacated the stay issued by its motions panel, restoring the district court’s injunction and suspending reporting obligations under the CTA pending resolution of the appeal.
- Dec. 31, 2024 – The Department of Justice filed an application for stay with the U.S. Supreme Court requesting that the Dec. 5 injunction be stayed or narrowed while the case proceeds through the Fifth Circuit.
- Jan. 7, 2025 – The U.S. District Court for the Northern District of Texas issued a second nationwide injunction enjoining enforcement of the CTA, suspending all reporting obligations under the CTA (Smith v. U.S. Department of the Treasury).
- Jan. 23, 2025 – The U.S. Supreme Court granted a stay of the Dec. 3rd injunction pending the disposition of the Texas Top Cop Shop appeal before the Fifth Circuit and the disposition of a petition for a writ of certiorari and related final judgment.
- Feb. 18, 2025, the U.S. District Court for the Eastern District of Texas agreed to stay its Jan. 7, 2025, order until the appeal in the Smith case is completed.
FinCEN, in its notice published Feb. 19, 2025, clarified that the agency may, nevertheless, extend certain deadlines and change the BOI reporting obligations for certain low-risk entities, like small businesses. FinCEN noted that, “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.”
It may be the case that in the coming month FinCEN again extends or modifies the applicable reporting deadlines for initial and updated BOI reports. In addition, the U.S. House of Representatives unanimously passed a bill that would extend the filing deadline for a majority of entities to Jan. 1, 2026. A similar Senate bill has been introduced but, as of the date of this alert, had not been passed.