Overview
On February 19, 2025, the Financial Crimes Enforcement Network (FinCEN) confirmed that the beneficial ownership reporting requirements under the Corporate Transparency Act (CTA) are back in effect, with a new compliance deadline of March 21, 2025 for most reporting companies. This announcement came on the heels of the district court in Smith v. U.S. Department of the Treasury granting a stay of its injunction against enforcement of the CTA, citing the Supreme Court's decision to stay the similar injunction in the Texas Top Cop Shop v. McHenry case.
As reported in a prior client alert, the US District Court for the Eastern District of Texas previously found in the Texas Top Cop Shop case that the CTA is likely unconstitutional and issued a nationwide preliminary injunction prohibiting enforcement of the law. The US Court of Appeals for the Fifth Circuit ultimately declined to stay that injunction, but the US Supreme Court granted a stay of the injunction following further appeal. Separately, the US District Court for the Eastern District of Texas had issued a nationwide injunction against enforcement of the CTA in the Smith case. Both the Texas Top Cop Shop and Smith cases are now pending consideration in the Fifth Circuit.
While the two nationwide injunctions against enforcement of the CTA have now been stayed, rendering the CTA’s beneficial ownership reporting requirements enforceable once again, we note that the Texas Top Cop Shop and Smith cases remain pending and full arguments have not yet been heard by the appeals courts. In addition, FinCEN has stated that between now and March 21 it will assess its options to further modify the beneficial ownership reporting deadlines, while prioritizing reporting for those entities that pose the most significant national security risks. FinCEN also said that it intends to initiate a process this year to revise the reporting requirements to reduce the burden on lower-risk entities, including small businesses.
Separately, the US House of Representatives recently approved a bill (H.R. 736) that would extend the beneficial ownership reporting deadline until January 1, 2026 for entities formed before January 1, 2024. If enacted into law, this bill would supersede the March 21, 2025 deadline announced by FinCEN.
We continue to closely monitor the situation and will provide further updates as new information becomes available.
At this time, we advise our clients to prepare to file beneficial ownership information reports as required under the CTA. Unless FinCEN or Congress further modifies the reporting requirements or reporting deadlines, the reports will be due on March 21. Please reach out to a member of your Steptoe legal team or email us at CTA@steptoe.com if you have questions or would like help in complying with your CTA reporting obligations.
