CTA Update: BOI Back Again with New Deadline

Author: Mike Chiang of Han Kun LLP

Summary

Following a ruling by the U.S. District Court for the Eastern District of Texas in Smith v. U.S. Department of the Treasury on February 17, 2025, the Beneficial Ownership Information (BOI) reporting requirements under the Corporate Transparency Act (CTA) are once again in effect.  Subsequently, the Financial Crimes Enforcement Network (FinCEN) has extended the reporting deadline by 30 days, allowing most reporting companies until March 21, 2025, to comply.

Timeline of Events

I.   Texas Top Cop Shop Inc. v. Garland

• December 3, 2024 – The U.S. District Court for the Eastern District of Texas issued a preliminary injunction, temporarily halting CTA enforcement due to constitutional concerns.

• December 23, 2024 – The Fifth Circuit granted the government's motion for an emergency stay, effectively reinstating CTA requirements, arguing the law is constitutional under the Commerce Clause and imposes minimal compliance burdens.

• December 26, 2024 – The Fifth Circuit vacated its stay, reinstating the injunction against CTA enforcement to maintain the constitutional status quo while the appeal proceeds.

• January 23, 2025 – The U.S. Supreme Court granted the government's application for a stay of the injunction in Texas Top Cop Shop.  However, BOI reporting could not yet be enforced due to a separate injunction in Smith v. U.S. Department of the Treasury, which remained in place.

II.   Smith v. U.S. Department of the Treasury

• January 7, 2025 – The U.S. District Court for the Eastern District of Texas issued an injunction, suspending FinCEN's enforcement of BOI reporting requirements.

• February 5, 2025 – The U.S. Department of Justice (DOJ) filed an appeal and requested a stay to resume enforcement of CTA.

• February 17, 2025 – The U.S. District Court for the Eastern District of Texas lifted the injunction, allowing BOI reporting requirements to be enforced again.

• February 18, 2025 – FinCEN officially announced a 30-day extension, pushing the compliance deadline to March 21, 2025, for most reporting companies.

Impact on BOI Reporting Deadlines

• Most Reporting Companies: The new deadline to file initial, updated, or corrected BOI reports is March 21, 2025.

• Companies with Later Deadlines: Entities that already had reporting deadlines beyond March 21 (e.g., those qualifying for disaster relief extensions) should adhere to their original deadlines.

• Exempt Entities: Plaintiffs in National Small Business United v. Yellen (including Isaac Winkles and members of the National Small Business Association as of March 1, 2024) remain exempt from BOI reporting at this time.

FinCEN announced that it will continue to evaluate its options for further deadline modifications and potential rule changes to reduce compliance burdens on low-risk entities, particularly small businesses.

Next Steps for Businesses

1.   Review BOI Filing Obligations: Ensure your company meets the new March 21, 2025, deadline.

2.   Monitor FinCEN Updates: FinCEN may implement further adjustments based on ongoing regulatory reviews.

3.   File Reports Using FinCEN's E-Filing System: Reports can be submitted at FinCEN's E-Filing System.

4.   Stay Informed on Legal Developments: The appeal process is ongoing, and further court rulings may affect compliance obligations.

Conclusion

While the CTA's BOI reporting requirements are now back in effect, the 30-day extension provides businesses with additional time to comply.  Companies should act promptly to meet their obligations and stay informed about potential regulatory changes.