CTA Reporting Requirements Back in Effect with Extended Reporting Deadline; FinCEN Announces Intention to Revise Reporting Rule [February 19, 2025]
Following the February 18, 2025 decision by the U.S. District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury, et al., FinCEN has announced that beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act are back in effect, with a new deadline of March 21, 2025 for most companies. A copy of FinCEN’s February 18, 2025 Notice (FIN-2025-CTA1) containing further details relating to the updated deadlines and further anticipated modifications can be found on FinCEN’s website (https://www.fincen.gov/boi).
FinCEN has also announced that it will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks. FinCEN 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. For the most current information regarding updated deadlines and further modifications to reporting requirements, please visit FinCEN’s website.
Important Updates Regarding Nationwide Preliminary Injunctions [updated February 19, 2025]
On December 3, 2024, in the case of Texas Top Cop Shop v. Bessent, et al., Judge Mazzant of the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction enjoining the U.S. Department of the Treasury from enforcing the Corporate Transparency Act (the “CTA”) and its related regulations. The Court also ruled that reporting companies need not comply with the CTA’s January 1, 2025 deadline for filing beneficial ownership reports. On January 23, 2025, the Supreme Court granted the government’s motion to stay a nationwide injunction issued by a federal judge in Texas.
On January 7, 2025, in the case of Smith, et al. v. U.S. Department of the Treasury, et al., Judge Kernodle of the U.S. District Court for the Eastern District of Texas issued an order staying FinCEN’s regulations implementing the BOI reporting requirements, precluding FinCEN from requiring BOI reporting or otherwise enforcing the CTA’s requirements. On February 5, 2025, the U.S. Department of Justice—on behalf of Treasury—filed a notice of appeal of the district court’s order and, in parallel, requested a stay of the order during the appeal. On February 18, 2025, the court agreed to stay its January 7, 2025 order until the appeal is completed. 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.
[NOTE: The below text provides a brief description of the CTA and its corresponding initial reporting requirements, which the U.S. Department of Treasury was previously enjoined (or prohibited) from enforcing and, as a result of the stay (or stop) of multiple nationwide preliminary injunctions, has since revised such initial reporting requirements as noted in the banners above.]
The Corporate Transparency Act (the "CTA") went into effect on January 1, 2024. The purpose of the CTA is to facilitate enforcement of anti-money-laundering laws, but it affects millions of ordinary Americans who own interest in small businesses.
Unless an exemption applies, the CTA requires all entities, including corporations, limited partnerships and limited liability companies, that are created by filing a document with a state's secretary of state or other state agency (the Division of Corporations in Utah) to disclose to the federal government in a Beneficial Ownership Information Report (“BOI Report”) the identity, date of birth, residential address, and a copy of a government-issued photo ID for each of their beneficial owners and company applicants. The CTA defines a beneficial owner as someone who owns or controls at least 25% of the reporting company or who exercises “substantial control” over the entity. A company applicant is an individual who directly files or is primarily responsible for the filing of the document that creates or registers an entity. The BOI Report is filed with the Financial Crimes Enforcement Network (“FinCEN”), which is a bureau of the Treasury Department.
There are two dates to be aware of for purposes of complying with the CTA: (i) any reporting company that was created during 2024 must file its BOI Report within 90 days after creation and (ii) any reporting company that existed prior to January 1, 2024 must file its BOI Report no later than January 1, 2025.
In addition, beginning January 1, 2024, changes to any information previously provided to FinCEN must be reported within 30 days of the change. There are stiff penalties for willfully failing to comply with the CTA’s reporting requirements, including civil fines of up to $10,000 and possible criminal prosecution.
FinCEN designed its reporting interface so that reporting companies would be able to file BOI Reports on their own. Nevertheless, you may choose to engage BTJD to assist you with your reporting obligations under the CTA, including identifying reporting companies and beneficial owners. However, please be aware that our ability to assist clients with their filing obligations will become more and more limited as the end of the year approaches.
NOTE: This page provides only an informational summary of the CTA and should not be relied on as legal advice or a full scope of your obligations under the CTA. For more information, please refer to FinCEN's website, which may be accessed via the Resources & Guidance section below.
To file a BOI Report for a reporting company or for information on how to file a BOI Report, click the "File with FinCEN" button below. This button will take you directly to FinCEN's website.
Click the button below to watch a 5-minute step-by-step demonstration video on how to file a BOI Report online through FinCEN's website.
While it's not required, beneficial owners and company applicants may obtain a FinCEN identifier which can be included in the BOI Report in place of the party's personal information. Click the button below to obtain a FinCEN identifier directly through FinCEN's website.
There are 23 types of entities that are exempt from filing a BOI Report. Click the "Learn More" button below for a list of these exempt entities.
For more information about the reporting requirements under the Act, please refer to FinCEN's FAQs page or contact a BTJD attorney.