Corporate Transparency Act Back in Effect, But with Extended Deadlines

High drama in Corporate Transparency Act (CTA) world: The latest saga involving the CTA commenced with the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., where a federal district court judge for the U.S. District Court for the Eastern District of Texas on Dec. 3, 2024, ordered a nationwide preliminary injunction on enforcement of the CTA and related regulations (even though neither party had asked for a nationwide injunction) and suspended the reporting deadlines.¹ The government requested a stay of the injunction in both the district court, which denied the government's request, and again at the U.S. Court of Appeals for the Fifth Circuit. On Dec. 23, 2024, the Fifth Circuit approved the government's emergency motion for a stay, effectively reinstating enforcement of the CTA, and agreed to expedite oral argument to the next available panel.² On Dec. 24, 2024, the plaintiffs petitioned the Fifth Circuit for an emergency rehearing en banc.

The Fifth Circuit's action resulted in the reinstatement of the CTA and all of its reporting requirements, deadlines and penalties. In doing so, the court added the following footnote:

The Businesses warn that lifting the district court's injunction days before the compliance deadline would place an undue burden on them. They fail to note, however, that they only filed suit in May 2024 and the district court's preliminary injunction has only been in place for less than three weeks as compared to the nearly four years that the Businesses have had to prepare since Congress enacted the CTA, as well as the year since FinCEN announced the reporting deadline.

Six hours later, the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) posted a statement on its website acknowledging the reinstatement of enforcement of the CTA and extending the reporting deadlines, as set forth below. In doing so, FinCEN wrote:

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.

Going forward, there likely will be ongoing developments related to the CTA in all branches of the government: the judicial sphere, as numerous cases are pending across the country; in Congress, where legislation to repeal the CTA or to delay the reporting deadlines has been proposed; and in the executive branch, with the incoming administration, as evidenced by Project 2025, which proposes the repeal of the CTA on the basis that the CTA is poorly written, has an overbroad beneficial ownership reporting rule and will cause small businesses to incur high costs.

Revised Reporting Deadlines

Based on FinCEN's post, the new reporting deadlines are as follows (please read carefully, as not all deadlines have been extended):

• Reporting companies created or registered prior to Jan. 1, 2024, have until Jan. 13, 2025, to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by Jan. 1, 2025.)
• Reporting companies created or registered in the U.S. on or after Sept. 4, 2024, that had a filing deadline between Dec. 3, 2024, and Dec. 23, 2024, have until Jan. 13, 2025, to file their initial beneficial ownership information reports with FinCEN.
• Reporting companies created or registered in the U.S. on or after Dec. 3, 2024, and on or before Dec. 23, 2024, have an additional 21 days from the initial 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 Jan. 13, 2025. These companies should abide by whichever deadline falls later.
• Reporting companies that are created or registered in the U.S. on or after Jan. 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.
• Plaintiffs in National Small Business United, d/b/a the National Small Business Association, et al. 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.

For More Information

Holland & Knight has established a Corporate Transparency Act Team to address questions about the CTA in general, as well as questions arising from discrete transactional matters. For more information on the CTA's specific impact on you or your organization, please reach out to the CTA team or your Holland & Knight contact.

Notes

¹ See Holland & Knight's previous alerts, "Corporate Transparency Act Reporting," Dec. 4, 2024; "Developments in the Texas Top Cop Shop Case Impact Corporate Transparency Act," Dec. 9, 2024; and "Corporate Transparency Act: Fast-Moving Judicial Developments in Texas Top Cop Shop Case," Dec. 16, 2024.

² To add to the confusion, the first version of the Congressional Continuing Resolution that failed to pass the U.S. House of Representatives on Dec. 18, 2024, had contained a provision extending by one year (to 2026) the due date for reporting companies formed prior to 2024.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.