The U.S. District Court for the Eastern District of Texas in Smith et al. v. U.S. Department of Treasury, et al., 6:24-cv-0036 (E.D. Tex), decided that the beneficial ownership information (“BOI”) reporting requirements under the Corporate Transparency Act (“CTA”) are back in effect.
On January 24, 2025, we reported in our article “Enforcement Of The Corporate Transparency Act Still On Hold” that the CTA was on hold due to a nationwide injunction issued by Judge Kernodle of the Eastern District of Texas, despite the Supreme Court ruling on January 23, 2025. On February 5, 2025, the U.S. Department of Justice filed a notice of appeal of the nationwide injunction issued by Judge Kernodle. On February 18, 2025, Judge Kernodle agreed to lift the order granting a nationwide injunction of the CTA. The new deadline to file an initial, updated, and/or corrected BOI report is March 21, 2025.
FinCEN requires information regarding three groups in its BOI reporting requirement: (1) the Reporting Company, (2) Beneficial Owner, and (3) Company Applicant. For more information regarding BOI reporting requirements, click here to read Attorney Rehmeyer’s article “Corporate Transparency Act Reporting Requirements Deadline Approaching.”
The CTA reporting requirements are back in effect, however, the U.S. House and Senate have introduced several bills to modify the deadlines or eliminate CTA altogether.
On February 10, the U.S. House unanimously passed H.R. 736, extending CTA’s filing deadline until January 1, 2026. The proposal has moved to the Senate for consideration. The Senate is also considering S. 505, which would modify the deadline for filing beneficial ownership information reports for reporting companies formed or registered before January 1, 2024. These House and Senate bills would postpone the deadline but leave the reporting requirements intact.
Other legislation, introduced as H.R. 125 and S. 100, the “Repealing Big Brother Overreach Act,” would repeal the CTA entirely. The bills are under committee consideration in their respective chambers.
FinCEN has also said it “intends to initiate a process this year to revise the BOI reporting rule to reduce the burden for lower-risk entities, including many U.S. small businesses.”
Changes could be made based on further developments as the law progresses through the courts, changes in regulations or guidance, or even further Congressional action. While the reporting requirements are in effect, there may be more changes on the horizon in the coming month and the long term.
As a reminder, the penalties for willfully violating the CTA’s reporting requirements include (1) civil penalties of up to $500.00 per day that a violation is not remedied, (2) a criminal fine of up to $10,000.00, and/or (3) imprisonment of up to 2 years.
CGA strongly recommends reviewing your company structure and preparing for these reporting requirements. Our firm is willing and able to answer any questions you may have or amend, revise, or prepare any necessary documents. Click here to contact any attorney within CGA Law Firm’s Business Practice Group here.
Summer M. Pannizzo
Attorney
Learn more about Summer here.
