Fifth Circuit Lifts Injunction on Enforcement of the Corporate Transparency Act; FinCEN Extends Reporting Deadline

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:

• Businesses that are subject to BOI reporting and that were formed or registered to do business in the United States prior to January 1, 2024, have until January 13, 2025 to file their initial BOI reports with FinCEN.
• Businesses that are subject to BOI reporting and that were formed or registered to do business 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 BOI reports with FinCEN.
• Businesses that are subject to BOI reporting and that were formed or registered to do business 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 BOI reports with FinCEN.
• Businesses that are subject to BOI reporting and that are formed or registered to do business in the United States on or after January 1, 2025, will have 30 days to file their initial BOI reports with FinCEN (not 90 days as businesses created in 2024 were given).

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.