BOI Update: The Corporate Transparency Act (CTA)

On February 17, 2025, the U.S. District Court for the Eastern District of Texas granted the government’s motion to effectively remove the nationwide injunction on the Corporate Transparency Act. As a result, Beneficial Ownership Information reporting is once again required. The Financial Crimes Enforcement Network (FinCEN) extended the deadline for the reporting requirements to March 21, 2025 for the vast majority of reporting entities. Entities previously granted a deadline after March 21, 2025 (e.g. disaster relief) may comply with the later deadline.

The constitutionality of the CTA continues to be challenged, and further developments in litigation – or further action from FinCEN or Congress – may affect the BOI reporting requirements. The US House of Representatives passed a resolution expressing its stance that the BOI reporting deadline for companies formed or registered before January 1, 2024, should be extended to January 1, 2026. The U.S. Senate introduced a related bill. FinCEN also indicated that it will assess its options to modify further deadlines or reporting requirements for lower-risk entities, and it may further modify the March 21 deadline.

Here is an updated timeline of what has happened:

• December 3, 2024: A federal judge in the Eastern District of Texas issued a nationwide preliminary injunction, halting the enforcement of the CTA's beneficial ownership reporting requirements, citing potential constitutional concerns.
• December 23, 2024: The Fifth Circuit Court of Appeals lifted this injunction, reinstating the CTA's reporting obligations.
• December 26, 2024: A different panel of the Fifth Circuit reinstated the nationwide injunction, once again pausing the CTA's enforcement.
• January 7, 2025: A judge of the United States District Court for the Eastern District of Texas heard a second case on the constitutionality of the CTA and issued a separate nationwide preliminary injunction.
• January 23, 2025: The U.S. Supreme Court stayed one injunction, but did not address the other, which led to the Financial Crimes Enforcement Network (FinCEN) to state that compliance with the CTA's reporting requirements remains voluntary at this time.
• February 17, 2025: A federal judge in Texas lifted the remaining injunction that had halted the enforcement of the CTA, effectively reinstating the CTA's requirements.

The CTA's enforcement has undergone several changes over recent months due to ongoing legal challenges and legislative efforts, and further changes are possible if not likely. Entities subject to the CTA should monitor these developments closely and consult legal counsel to ensure compliance with any forthcoming requirements.

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