On January 1, 2021, Congress enacted the Corporate Transparency Act (the “CTA”) for the purpose of protecting U.S. national security, combat money laundering, and promoting financial transparency. The CTA requires certain businesses and other entities to report information on their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), an agency in the U.S. Department of Treasury.
On January 1, 2024, mandatory compliance with these reporting obligations began, requiring more than 30 million small- and medium-sized businesses to report ownership information to FinCEN by January 1, 2025.
Constitutional Challenges
Despite the bill that created the CTA passing with wide bipartisan support under President Trump’s first term, some were outraged and many lawsuits have been filed now that mandatory compliance is required. Several district courts have denied requests to enjoin the CTA, ruling in favor of the Department of the Treasury. However, two of those lawsuits resulted in judgments declaring the CTA unconstitutional and blocking its enforcement.
One court issuing a limited injunction applicable to just the plaintiffs involved in that lawsuit while the other, a federal district court in Texas, issued a preliminary injunction applicable to all reporting companies nationwide on Tuesday, December 3, 2024.
In response to that nationwide preliminary injunction, FinCEN announced it would not enforce the CTA reporting deadlines while the injunction was in effect (though voluntary compliance was permitted). The Department of Justice, on behalf of the Department of the Treasury, filed an appeal with the U.S. Court of Appeals for the Fifth Circuit and also an emergency motion to lift the nationwide injunction pending their appeal.
In the early afternoon of December 23, 2024, a three-judge panel of the Fifth Circuit lifted the Texas district court’s nationwide preliminary injunction, finding that the federal government is likely to prevail in a constitutional challenge to the CTA.
That means all of the reporting deadlines under the CTA are back in effect as of December 23, 2025.
Deadline Extension
Recognizing the short time remaining to comply with the CTAs reporting obligations, FinCEN quickly issued a notice extending the deadlines for CTA reporting impacted by the nationwide injunction issued by federal district court in Texas. That notice provides the following extensions:
- Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)
- Reporting companies created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.
- Reporting companies created or registered in the United States on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their original 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 January 13, 2025. These companies should abide by whichever deadline falls later.
