Compliance Reinstated With March 21, 2025 Filing Deadline

A Year in Review: Legal Challenges and Court Decisions

The Corporate Transparency Act (CTA), legislation designed to combat illicit financial activities, has experienced significant legal challenges over the past year. The latest decision from the U.S. District Court for the Eastern District of Texas has reinstated the CTA’s reporting obligations, reversing a nationwide injunction. This article traces the key legal events impacting the CTA in the last year and underscores the critical next steps entities must take to remain compliant.

Since its enactment, the CTA has faced scrutiny and legal pushback, particularly concerning its reporting requirements for beneficial ownership information. Over the past year, two pivotal cases have defined the landscape:

1. Texas Top Cop Shop, Inc., et al. v. Garland, et al. (No. 4:24-cv-478, E.D. Texas, Dec. 3, 2024): The U.S. Supreme Court issued a stay on a nationwide injunction related to the CTA in this case. However, the decision did not extend to a related case, leaving uncertainty around broader reporting obligations.
2. Smith, et al. v. U.S. Department of the Treasury, et al. (6:24-cv-00336, E.D. Tex., Feb. 18, 2025): In a significant ruling, the U.S. District Court for the Eastern District of Texas granted the Department of Justice’s request to stay the nationwide injunction that had previously paused CTA reporting requirements. This decision effectively reinstates the CTA’s reporting obligations.

Implications of the Reinstatement

The reinstatement means that all entities subject to the CTA’s reporting requirements are once again legally obligated to file beneficial ownership information (BOI) reports. Non-compliance could result in substantial fines and penalties. In response to the period during which reporting requirements were paused, the Financial Crimes Enforcement Network (FinCEN) has extended the filing deadline to March 21, 2025.

While FinCEN continues to evaluate the need for further deadline extensions, and although a bipartisan bill has been introduced in Congress proposing a delay of the reporting requirements until January 1, 2026, the current deadline remains firm. Therefore, entities should proceed with filing without delay.

Immediate Steps Required for Compliance

Given the reinstatement of the CTA’s reporting obligations, entities should take the following immediate actions:

1. Assess Reporting Requirements: Determine whether your entity falls within the scope of the CTA’s reporting obligations. This includes corporations, limited liability companies, and similar entities created or registered to do business in the United States.
2. Gather Required Information: Collect all necessary beneficial ownership information, including identifying details of individuals who own or control the entity.
3. File by the Deadline: Ensure that all BOI reports are filed with FinCEN by March 21, 2025. The filing can be completed through the official FinCEN portal.
4. Monitor Legislative Developments: Stay informed about any legislative changes that may impact reporting requirements, including the potential enactment of the proposed bipartisan bill extending the deadline.

Conclusion

The recent court decision reinstating the CTA’s reporting obligations marks a significant development in corporate compliance requirements. With the March 21, 2025 deadline rapidly approaching, affected entities must act swiftly to meet their reporting obligations and avoid penalties. Given the complex nature of these requirements and the potential for future legal and legislative developments, seeking professional legal and compliance advice is highly recommended.

Entities can complete their BOI reports through the FinCEN portal here. Time is of the essence—act now to ensure compliance and avoid unnecessary legal and financial repercussions.