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As discussed in a previous Client Alert, on December 3, 2024, a federal judge in Texas instituted a nationwide preliminary injunction of the Corporate Transparency Act (“CTA”). This was followed by a separate federal court national injunction against the CTA, the effects of which were to put the obligation of companies to report their beneficial ownership information (“BOI”) to the U.S. Financial Crimes Enforcement Network (“FinCEN”) on hold.
In the most recent twist in the saga of the CTA’s constitutionality and applicability, on January 23, 2025, the U.S. Supreme Court granted the government’s motion to stay the first nationwide injunction, and on February 17, 2025, the federal judge in the second case signed an order staying the previously issued injunction.
As a result of these developments, the obligation of companies to report their BOI to FinCEN is once again in effect. In a recent alert on this topic, FinCEN notes that the “Department of the Treasury recognizes that reporting companies may need additional time to comply with their BOI reporting obligations” and, as a result, FinCEN has extended the reporting deadline for companies to March 21, 2025, unless a reporting company has previously been given a reporting deadline later than March 21, 2025. This means that the vast majority of non-exempt reporting companies will need to report information about themselves and their “beneficial owners”, which is defined as the individuals who (i) own or control 25% or more of a company or (ii) exercise “substantial control” over the company, to FinCEN via its online portal on or ahead of the March 21, 2025 deadline to be in compliance with the CTA. Failure to comply with the CTA can subject both companies and individuals to fines and potential criminal penalties for willful violations.
We are advising companies to continue monitoring developments regarding the CTA. To avoid any possibility of non-compliance, companies are encouraged to make their CTA filings. However, FinCEN has stated that it will assess options to further modify deadlines for BOI reporting ahead of the March 21, 2025, deadline, while prioritizing the reporting for entities deemed to pose “the most significant national security risks.” Additionally, some relief from the BOI reporting deadline may come from Congress. On February 10, 2025, the U.S. House of Representatives unanimously passed a bill that would extend the reporting deadline to January 1, 2026, for reporting companies that were formed prior to January 1, 2024. A companion bill was introduced in the U.S. Senate on February 12, 2025, which together with the House bill, could provide a statutory extension for certain reporting companies.
We will keep our clients and interested parties updated on these evolving developments.
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If you have questions or would like additional information, please contact your
primary EGS attorney with whom you work or email CTA@egsllp.com.
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