The question of the month for lawyers trying to advise their clients and protect their own firms: what, exactly, is the deadline for filing Business Ownership Information (BOI) Reports in compliance with the Corporate Transparency Act (CTA)? In the course of the last month the answer has changed 5 times – from January 1, to deadline stayed, back to January 1, then extended to January 13, and, as of December 26, the deadline again is stayed.
As we informed our insureds earlier this month, on December 3, 2024, the U.S. District Court for the Eastern District of Texas found the CTA is likely unconstitutional and issued a nationwide preliminary injunction suspending its enforcement by FinCEN (Financial Crimes Enforcement Network) pending resolution of the merits of the suit regarding the CTA’s constitutionality. On December 23, a motions panel of the Fifth Circuit Court of Appeals disagreed with the District Court and held that the government was likely to prevail on the merits. The appellate court placed the appeal on an expedited briefing schedule, stayed the preliminary injunction and reinstated the January 1, 2025 filing deadline. In light of the obvious confusion that would ensue, FinCEN voluntarily extended the deadline for most reporting companies to January 13, 2025. However, on December 26, the merits panel of the Fifth Circuit to which the appeal was assigned vacated the motions panel’s stay of the injunction, “to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments” on an expedited basis. Oral arguments are set March 25, 2025.
Considering this ruling, FinCEN issued an alert on December 27 stating, “in light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.” It may well comply with the injunction and continue to accept voluntary filings during the litigation.
So, where do things stand as of today, and what should lawyers do to protect ourselves and our clients who are subject to the CTA?
The nationwide preliminary injunction enjoining enforcement of the CTA and the impending reporting deadlines is in effect. The injunction applies to initial reports, updates, corrections of reporting companies and other CTA-related filings.
No filings under the CTA are currently required, including the initial BOI reports for companies formed or registered prior to 2024 that had most recently been due by January 13, 2024. Reporting companies may still voluntarily file.
Pay CLOSE ATTENTION as we await the Fifth Circuit’s ruling on the merits in Texas Top Cop Shop, Inc., et al. v. Garland, et al., and be ready to act quickly for our clients when that decision is rendered. It is almost certain that the losing party will appeal to the U.S. Supreme Court. Also, keep an eye out for the decision in National Small Business United v. Yellen, which is pending before the Eleventh Circuit, as well as any other decisions around the country that may affect parties’ obligations under the CTA.
Monitor efforts in Congress to repeal the CTA.
This is a fluid situation, so pay attention.
Article by Sharon Stuart.