UPDATE: Corporate Transparency Act – INJUNCTION LIFTED

By: Rachael E. Spina

On February 18, 2025, a Texas federal judge in Smith, et al. v. U.S. Department of the Treasury, et al. lifted the remaining injunction prohibiting the enforcement of the Corporate Transparency Act (the “CTA”), once again reinstating the Beneficial Ownership Information (“BOI”) reporting requirements of the CTA.  The Smith decision came just a few weeks after an order of the US Supreme Court lifted the injunction prohibiting enforcement of the CTA in Texas Top Cop Shop et. al. v. Garland.

In response to the Smith decision, the Financial Crimes Enforcement Network (“FinCEN”) published an alert on February 18, 2025 clarifying certain new CTA deadlines as follows:

• For the vast majority of reporting companies, the new deadline to file an initial, updated, and/ or corrected BOI report is now March 21, 2025. FinCEN will provide an update before then of any further modification of this deadline, recognizing that reporting companies may need additional time to comply with their BOI reporting obligations once this update is provided.
• Reporting companies that were previously given a reporting deadline later than the March 21, 2025 deadline must file their initial BOI report by that later deadline. For example, if a company’s reporting deadline is in April 2025 because it qualifies for certain disaster relief extensions, it should follow the April deadline, not the March deadline.
• As indicated in the alert titled “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)”, Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv01448 (N.D. Ala.)—namely, Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024)—are not currently required to report their beneficial ownership information to FinCEN at this time.

Further, the FinCEN alert states:

“… [I]n keeping with the Treasury’s commitment to reducing regulatory burden on businesses, during this 30-day period FinCEN will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks.” 

Importantly, in further recognition of the regulatory burden of compliance, FinCEN also announced that it 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.”  

Background:

As discussed in Cohen and Wolf, P.C.’s prior client updates, effective as of January 1, 2024, the CTA and the rules issued thereunder by FinCEN required most U.S. entities and foreign entities registered to do business in the United States (“Reporting Companies”) to file BOI reports with FinCEN disclosing information about the Reporting Company and its beneficial owners prior to reporting deadlines (the “Reporting Rule”).

Below, please find a timeline of the significant developments.

Timeline:

• December 3, 2024 – in Texas Top Cop Shop, Inc. et al. v. Garland, Judge Amos Mazzant issued a preliminary injunction, which was a temporary order barring nationwide enforcement of the CTA and the Reporting Rule.

• December 5, 2024 – The Federal Government appealed the Texas Top Cop Shop decision to the 5^th Circuit Court of Appeals and filed an emergency motion seeking a stay of the nationwide injunction pending the outcome of the appeal.

• December 23, 2024 – the 5^th Circuit ruled on the emergency motion in favor of the Federal Government – finding that the preliminary injunction had been lifted and expediting the appeal for oral argument.  

• December 26, 2024 – the 5^th Circuit Court of Appeals vacated the same court’s order granting the stay of the preliminary injunction, thereby reinstating the preliminary injunction enjoining enforcement of the CTA and the Reporting Rule issued by the lower Texas Court.

• January 7, 2025 – the U.S. District Court for the Eastern District of Texas issued a separate nationwide preliminary injunction against enforcement of the CTA in the Smith, et al. v. U.S. Department of the Treasury, et al. Case (“Smith Case”).

• January 23, 2025 – Supreme Court lifted the nationwide injunction originating in the Texas Top Cop Shop case; the Supreme Court’s order did not address the separate nationwide injunction originating in the Smith Case. 

• January 24, 2025 – FinCEN issued a statement that, despite the Supreme Court’s order, Reporting Companies are still not required to file BOI reports due to the Smith Case injunction.

• February 5, 2025 – the government filed an appeal case seeking a stay of the injunction originating in the Smith Case.

• February 18, 2025 – a Texas federal judge lifted a preliminary injunction issued in the Smith Case.

Cohen and Wolf’s Business & Corporate and Tax attorneys will continue to monitor developments concerning the CTA, including pending legislation, and will provide updates as they become available.  Please do not hesitate to contact us, should you have any questions.

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