Corporate Transparency Act: Guess Who’s Back (Again)

On February 18, the U.S. District Court for the Eastern District of Texas set aside the injunction it had issued in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex.).  This follows the United States Supreme Court’s grant of a motion to stay the nationwide preliminary injunction enjoining enforcement of the Corporate Transparency Act (CTA) issued by a different federal judge in Texas.  Taken together, it means that beneficial ownership information (BOI) reporting requirements under the CTA are back in effect. 

Under current guidance published on February 19 by Financial Crimes Enforcement Network of the U.S. Department of the Treasury (FinCEN), most reporting companies will need to comply with their respective BOI reporting requirements by March 21, which is 30 calendar days from the publication date.  Reporting companies previously given a reporting deadline after March 21 must file by the later deadline.

During this 30-day period, FinCEN will assess the CTA’s BOI reporting requirements and has reserved the right to further modify deadlines with an aim toward focusing on entities that pose the “most significant” national security risk while lessening the burden of BOI reporting on lower-risk entities such as U.S. small businesses.  What this means and whether BOI reporting requirements are further modified remains to be seen. 

Keep in mind that House Bill H.R. 736, extending the filing deadline for companies existing prior to January 1, 2024, passed the House by a vote of 408 to 0, and that a companion bill has been introduced in the Senate, titled Senate Bill S. 505.  Note, however, that there is no extension of the deadline in either bill for companies created or foreign companies first registered on or after January 1, 2024.

Phelps will continue monitoring developments related to the CTA and its implementing regulations.  In the meantime, we suggest reporting companies be prepared to comply with the CTA’s reporting requirements within the applicable deadlines.

Please contact Trevor J. Haynes, Hal West or any member of Phelps’ Business team if you have questions or need advice and guidance.