On December 23, 2024, the Fifth Circuit Court of Appeal in a per curiam opinion granted the U.S. Government’s emergency motion for a stay. The opinion was based, among other reasons, on the U.S. Government’s showing of likelihood of success on appeal, that it would be irreparably harmed without a stay, and that the CTA was in the public interest.[1]
On December 3, 2014, the U.S. District Court for the Eastern District of Texas granted the plaintiff’s motion for a preliminary injunction, making it effective nationwide.[2] Judge Amos L. Mazzant preliminarily enjoined the Corporate Transparency Act and Reporting Rule enforcement. The decision also postponed the effective date of the Reporting Rule.
Enacted in 2021, the CTA obligates corporations, limited liability companies, and certain other entities created or, in the case of non-U.S. entities, registered to do business in any U.S. state or tribal jurisdiction to file a Beneficial Ownership Information (BOI) report with the U.S. Financial Crimes Enforcement Network (FinCEN), transmitting information about the natural persons who are beneficial owners of the entity. FinCEN has issued the Reporting Rule, a regulation, to implement the CTA by providing more information on the reporting requirements and providing compliance deadlines, including a January 1, 2025, deadline for companies established or registered to do business in the U.S. before January 1, 2024.[3]
On December 23, FinCEN issued the following notice: “In light of a December 23, 2024, federal Court of Appeals decision, reporting companies, except as indicated below, are once again required to file beneficial ownership information with FinCEN. However, because the Department of the Treasury recognizes that reporting companies may need additional time to comply given the period when the preliminary injunction had been in effect, we have extended the reporting deadline as follows:
Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)
Reporting companies created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.
Reporting companies created or registered in the United States on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.
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.
Reporting companies that are created or registered in the United States on or after January 1, 2025 have 30 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.
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-cv-01448 (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.
[1] Texas Top Cop Shop, Inc. et al. v. Garland et al., U.S. Court of Appeals for the Fifth Circuit, No. 24-40792, Unpublished Order, Sec. 23, 2024.
[2] Texas Top Cop Shop, Inc. et al. v. Garland et al., No. 4:24-CV-478, Dkt. 30 (E.D. Tex. Dec. 3, 2024).
[3] 31 C.F.R. § 1010.380.