On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit granted a motion for a temporary stay of the injunction pending appeal in the case challenging the Corporate Transparency Act (CTA). This decision effectively lifts the nationwide injunction previously issued by the U.S. District Court for the Eastern District of Texas, which had temporarily halted the enforcement of the CTA.
As previously reported by our firm, The CTA, which took effect on January 1, 2024, requires reporting companies to file beneficial ownership information with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). The law aims to enhance ownership transparency and combat financial crimes, including money laundering.
The deadlines for filing the BOI report are January 1, 2025 for companies existing as of December 31, 2023, for entities formed in 2024, 90 days since their formation. Entities created or registered after 2024 would need to file their reports within 30 days of their formation.
In issuing the preliminary injunction, the court characterized the CTA as “quasi-Orwellian” and expressed concerns about its implications for federalism. The ruling suggests that the CTA’s requirement for entities to continually disclose information to the federal government could set a dangerous precedent for congressional power over companies.
Impact on Reporting Deadlines
In response to the Fifth Circuit’s decision, FinCEN has extended several reporting deadlines under the CTA:
- Reporting companies created or registered prior to 2024 now have until January 13, 2025, to file their beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)
- Reporting companies created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.
- Reporting companies created or registered in the United States between December 3, 2024 and December 23, 2024 have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.
- Reporting companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025. These companies should abide by whichever deadline falls later.
- Reporting companies that are created or registered in the United States on or after January 1, 2025 have 30 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.
- As previously reported by our firm, Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.), including the members of the National Small Business Association (as of March 1, 2024)—are not currently required to report their beneficial ownership information to FinCEN at this time.
Ongoing Legal Proceedings
It is important to note that the Fifth Circuit’s ruling does not represent a final decision on the CTA or its reporting requirements. The court has ordered that the appeal be expedited to the next available oral argument panel, indicating that further legal developments may occur in the near future.
Recommendations for Reporting Companies
- Review Filing Obligations: Assess your company’s status as a reporting company under the CTA and identify the applicable filing deadline and whether any reporting exceptions apply.
- Prepare Required Information: Begin gathering the necessary beneficial ownership information to comply with the CTA’s reporting requirements.
- Monitor Legal Developments: Stay informed about any further court decisions or regulatory updates that may affect CTA compliance obligations.
- Consult Legal Counsel: Consider seeking legal advice to ensure full compliance with the CTA and to address any specific concerns related to your company’s situation.
As the legal landscape surrounding the CTA continues to evolve, it is crucial for reporting companies to remain vigilant and prepared to meet their filing obligations. We will continue to monitor this situation and provide updates as new developments arise.
The CommLaw Group can help!
Contact us for assistance in navigating your company’s reporting obligations. We can help you determine the precise information your organization must disclose, identify any applicable exceptions, and guide you through the process of filing beneficial ownership information reports. Our team is ready to support you in ensuring full compliance with all relevant reporting requirements.
Jonathan S. Marashlian – Tel: 703-714-1313 / E-mail: jsm@CommLawGroup.com
Michael Donahue — Tel: 703-714-1319 / E-mail: mpd@CommLawGroup.com
Diana James – Tel: 703-663-6757 / E-mail: daj@CommLawGroup.com
