On February 18, 2025, the last remaining injunction preventing enforcement of the Corporate Transparency Act (“CTA”) was reversed by the federal judge in Texas who originally issued the injunction. Shortly after the injunction was lifted, the Financial Crimes Enforcement Network (“FinCEN”) issued a notice informing reporting companies that the new deadline to file beneficial ownership information (“BOI”) reports with FinCEN is March 21, 2025. FinCEN commented that it will assess options to further extend reporting deadlines, though no further clarification was provided.
Although there continue to be ongoing legal challenges regarding the constitutionality of the CTA, at this time we encourage all reporting companies to prepare and file any initial, corrected, and/or updated BOI reports before the deadline of March 21, 2025.
The CTA, which went into effect on January 1, 2024, requires “reporting companies” in the United States to disclose personal identifying information about their “beneficial owners” to FinCEN. The CTA is estimated to impact 32.5 million companies. On December 3, 2024, a U.S. District Court in Texas issued a preliminary injunction in McHenry v. Texas Top Cop Shop which temporarily prevented FinCEN from enforcing the CTA’s reporting requirements. The District Court held that the CTA was likely unconstitutional and that its implementation would irreparably harm reporting companies if they were forced to comply.
On December 23, 2024, a three-judge “motions panel” of the 5th Circuit Court of Appeals disagreed, opining that the U.S. Department of Justice made a strong showing that it is likely to succeed on the merits in defending the CTA’s constitutionality. The motions panel then lifted the District Court’s preliminary injunction.
On December 26, 2024, a three-judge “merits panel” of the 5th Circuit Court of Appeals vacated the portion of the motions panel’s order staying the preliminary injunction.
On January 7, 2025, another judge in a U.S. District Court in Texas issued a universal injunction in Smith v. United States Department of Treasury.
On January 23, 2025, the Supreme Court lifted the injunction for Texas Top Cop Shop that was reinstated on December 26, 2024.
On February 18, 2025, in light of the Supreme Court’s decision in Texas Top Cop Shop, and following an appeal by the U.S. Department of Justice, the Texas judge lifted the injunction that he had originally issued in Smith resulting in FinCEN being permitted to enforce the CTA’s reporting requirements once again.
Following the Texas judge’s decision to lift the injunction in Smith, FinCEN released a notice that reporting companies will have until March 21, 2025 to file initial BOI reports with FinCEN, but will continue to assess whether further extensions are warranted.
To learn more, explore our suite of resources prepared by the firm to address frequently asked questions and offer guidance on complying with the CTA. For additional support, we invite you to reach out to a member of our Corporate Transparency Act Task Force: Morgan Herchenbach, Dan McDowell, Brad Peck, and Kristin Thompson.
