In a recent client alert, we notified clients that on December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction against enforcement of the Corporate Transparency Act (CTA) and its beneficial ownership information (BOI) reporting requirement. This injunction barred nationwide enforcement of the CTA, and most importantly, enjoined businesses from having to file BOI reports with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”).
Following an appeal from the U.S. government, which we covered in another client alert, on December 23, 2024, the United States Court of Appeals for the Fifth Circuit lifted the injunction ordered by the district court pending the U.S. government’s appeal of the lower court’s decision. The Fifth Circuit’s rationale noted the likelihood of the U.S. government succeeding on the merits in defending the CTA’s constitutionality under the Commerce Clause and emphasized the public interest “in combatting financial crime and protecting our country’s national security.” The Fifth Circuit ordered an expedited review of the government’s still pending appeal to the next available oral argument panel.
Given that the original January 1, 2025, BOI reporting deadline for reporting companies is fast approaching, FinCEN has extended the reporting deadlines by which businesses must file their BOI reports as follows:
There is no filing fee and many businesses with relatively straightforward ownership and control structures have stated that it takes under 30 minutes to file a report. We recommend that clients do their best to meet the new filing deadlines to avoid penalties. These may include civil penalties of up to $500 per day or criminal penalties including imprisonment for up to two years, for willful failure to file or providing false or fraudulent information.
Further information on the CTA and step-by-step videos on how to file a BOI report and apply for a FinCEN ID are available at our CTA Resource Center.