Business and International Tax Blog

A recent court ruling has once again reinstated the Corporate Transparency Act (CTA) beneficial ownership information (BOI) reporting requirements. On February 17, 2025, the U.S. District Court for the Eastern District of Texas in Smith v. United States Department of the Treasury lifted the injunction that had been blocking enforcement of the CTA. Following this decision, the Financial Crimes Enforcement Network (FinCEN) announced that the new filing deadline for most reporting companies is now March 21, 2025.

While CTA reporting requirements are officially back in effect, FinCEN has indicated that further deadline extensions or modifications to the reporting rule for lower-risk entities may be forthcoming. For entities that have not yet filed, entity decisionmakers should take note of these developments and prepare accordingly.

Key Developments

1. Court Ruling Reinstates CTA Reporting Requirements
On February 17, 2025, Judge Jeremy Kernodle of the Eastern District of Texas granted the government’s motion to stay the preliminary injunction in Smith. This decision follows the Supreme Court’s January 23, 2025 ruling in McHenry v. Texas Top Cop Shop, Inc., which granted the government’s request to lift the injunction in that case. With the Smith injunction now lifted, reporting requirements under the CTA are once again enforceable.

2. New Reporting Deadline: March 21, 2025
FinCEN announced on February 19, 2025, that the new filing deadline for most reporting companies is now March 21, 2025. Companies with later deadlines due to specific exemptions (such as disaster relief) may still comply with their original deadline. FinCEN has not ruled out further deadline modifications for what it sees as “low risk” entities.

3. Potential Regulatory Changes for Lower-Risk Entities
FinCEN has indicated that it will review the BOI reporting rule and consider reducing burdens for lower-risk entities, including many U.S. small businesses. It remains unclear whether any changes will be implemented before the current March 21 deadline. So, entities should prepare to file by this new deadline.

4. Congressional Action on Reporting Deadlines
The U.S. House of Representatives has passed the Protect Small Businesses from Excessive Paperwork Act (H.R. 736), which would extend the CTA filing deadline for companies formed before January 1, 2024, to January 1, 2026. A companion bill has been introduced in the Senate, but its fate remains uncertain. If passed, this legislation would provide additional compliance time for many entities but would not impact companies formed on or after January 1, 2024.

What This Means for Your Business

1. Compliance is Required Again: With the Smith injunction lifted, companies must meet the March 21, 2025 deadline unless FinCEN or Congress extends it further. Going forward from March 21, 2025, entities must meet the 30-day deadlines for filing after formation and for updates.

2. Watch for Further Updates: FinCEN may modify deadlines or revise compliance requirements for lower-risk entities. Companies should monitor FinCEN announcements closely.

3. Legislative Relief is Uncertain: While Congress is considering an extension for pre-2024 entities, it has not yet been enacted. Companies should not assume additional relief will be granted before taking action.

4. Prepare to File Now: Companies should gather necessary BOI information and prepare their filings well ahead of the deadline to avoid last-minute issues.