As further described below, companies that were subject the Corporate Transparency Act’s (“CTA”) January 1, 2025 reporting deadline should now be prepared to submit beneficial ownership reports by March 21, 2025.
On December 23, 2024, the United States Court of Appeals for the Fifth Circuit (the “Court of Appeals”) stayed a preliminary injunction that had halted the enforcement of the CTA, which requires certain companies to report beneficial ownership information to the United States Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). The preliminary injunction arose in Texas Top Cop Shop, Inc., et al v. Garland et al., Case No (E.D. Tex., Dec 5, 2024) (“Texas Top”).
In parallel, another case challenging the validity of the CTA had been filed in the Eastern District of Texas, Smith et al v. United States Department of The Treasury et al., Case No. 6:24CV00336 (E.D. Tex. Sept. 12, 2024) (“Smith”). On January 7, 2025, the Smith court granted preliminary injunction against the enforcement of the CTA. Smith also was appealed to the Court of Appeals.
The Texas Top preliminary injunction was ultimately appealed to the United States Supreme Court (“SCOTUS”). SCOTUS stayed the Texas Top preliminary injunction, leaving Smith as the only judicial impediment to nationwide enforcement of the CTA, although at least one other case exists in federal court that limits the enforcement of the CTA against the plaintiffs in that specific case only.
On February 17, 2025, the court in Smith stayed its preliminary injunction, thereby allowing FinCEN to enforce the CTA. However, in recognition of how the litigation may have affected companies’ preparedness to comply with the CTA, FinCEN announced that most companies would have an extension until March 21, 2025 to comply with the CTA and that it would make additional adjustments to the reporting requirements to prioritize the reporting of companies that pose the greatest national security risk. With the exception of companies that were specifically given different filing extensions, the deadline to file, therefore, is March 21, 2025.
In addition, there is a bill pending before Congress that would extend the January 1, 2025 compliance deadline under the CTA to January 1, 2026. LimNexus will continue to monitor this and other cases for relevant CTA developments.
Firm Contacts
For assistance with any CTA related inquiries please contact any of the following LimNexus attorneys: