Corporate Transparency Act’s Reporting Requirements Are Back On

Business owners are, once again, facing immediate deadlines to comply with the requirements of the Corporate Transparency Act (the “CTA”). Enforcement of the CTA, and the final rule implementing it (the “Reporting Rule”), have been on hold since the Eastern District of Texas enjoined their enforcement on December 3, 2024 (the “District Court Order). See, Tex. Top Cop Shop, Inc. v. Garland, No. 4:24-CV-478, 2024 U.S. Dist. LEXIS 218294 (E.D. Tex. Dec. 3, 2024)).

After the District Court Order was entered, the Government filed an emergency motion to stay the District Court Order with the U.S. Court of Appeal for the Fifth Circuit. Yesterday, on December 23, 2024, the Fifth Circuit granted that emergency motion and stayed the (1) District Court’s Order and (2) injunction pending appeal. (See, Unpublished Order, Tex. Top Cop Shop, Inc. v. Garland, No. 24-40792 (No. 140-2) (Dec. 23, 2024)). The Fifth Circuit found, among other things, that the CTA is likely constitutional under the Commerce Clause and noted that any potential harm a stay would cause is outweighed by the public interest in combatting financial crime and protecting national security. (Unpublished Order at 5-6). With that, the injunction has been lifted and the Reporting Requirements are back on.

An updated set of deadlines by which all Beneficial Ownership Information Reports (“BOIR”) must be filed with the Financial Crimes Enforcement Network (“FinCEN”) has also been issued.

The new deadlines for filing an initial BOIR with FinCEN are as follows:

• Entities formed on or before December 31, 2023: January 13, 2025

• Entities formed on or after September 4, 2024 with an initial filing deadline between December 3, 2024 and December 23, 2024:  January 13, 2025

• Entities formed between December 3, 2024 and December 23, 2024: 21 days from the original filing deadline

• Entities formed on or after January 1, 2025: 30 days after formation

• Reporting companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025: these companies should abide by whichever deadline falls later

(See https://fincen.gov/boi). 

The Appeal to the Fifth Circuit has been expedited. Until then, and while this matter continues to make its way through the courts, all companies, and their owners, are subject to penalties if they fail comply with the requirements imposed by the CTA and Reporting Rule.

Epstein Ostrove, LLC will issue additional updates in the coming months when they are available.

For additional information, see: https://epsteinostrove.com/new-corporate-reporting-requirement/; https://epsteinostrove.com/corporate-transparency-act-requirements-on-hold-until-further-order-of-the-court/