CTA Filing Obligations: On Again, Off Again

HOLIDAY UPDATE!! In an opinion filed December 26, the Fifth Circuit has vacated its December 23 order that had lifted the District Court’s nationwide injunction. This means that the injunction is re-imposed for now, and that the meticulous set of deadlines FinCEN published on December 24 (described below) are now out the window. Stay tuned . . .

On December 3, 2024, a US District Court in Texas ruled the Corporate Transparency Act unconstitutional and issued a nationwide preliminary injunction against its enforcement. That ruling was promptly appealed, and on December 23, the Fifth Circuit Court of Appeals issued a temporary stay of the lower court’s injunction. FinCEN promptly reacted on December 24 by publishing an Alert that reinstated CTA filing obligations and somewhat extended certain prior deadlines.

For Verrill clients with companies that are subject to the CTA reporting requirements, here are the new filing deadlines for BOI reports:

• For reporting companies formed[1] before January 1, 2024:
  • If the company has not yet filed its initial BOI report, your filing deadline is now Monday, January 13, 2025.
  • If the company has already filed its initial BOI report, the deadline for filing updates and corrections is unchanged – still due within 30 days after the company learns of a change in facts previously reported.
• For reporting companies formed in 2024 between January 1 and September 3:
  • your 90-day filing deadline had already lapsed by the date of the District Court’s ruling, and thus is unchanged. Moreover, updates and corrections are still due within 30 days after the company learns of a change in facts previously reported.
• For reporting companies formed in 2024 between September 4 and September 24:
  • If the company has not yet filed its initial BOI report, your 90-day filing deadline has now been extended to Monday, January 13, 2025.
  • If the company has already filed its initial BOI report, the deadline for filing updates and corrections is unchanged – still due within 30 days after the company learns of a change in facts previously reported.
• For reporting companies formed in 2024 between September 25 and December 2:
  • If the company has not yet filed its initial BOI report, we think your 90-day filing deadline has now been extended by an additional 21 days. (FinCEN’s Alert on December 24 seemed to overlook this set of companies, but a 21-day extension would make sense here.)
• For reporting companies formed in 2024 between December 3 and December 23:
  • If the company has not yet filed its initial BOI report, your 90-day filing deadline has now been extended by an additional 21 days. (FinCEN’s Alert on December 24 was clear for this set of companies.)
• For reporting companies formed in 2024 between December 24 and December 31:
  • Your 90-day filing deadline for filing the initial BOI report remains in effect, unchanged.
• For reporting companies formed on or after January 1, 2025:
  • Your 30-day filing deadline for filing the initial BOI report remains in effect, unchanged. Those who plan to form a new entity in 2025 should collect the necessary BOI information during the formation process.

Additional details of interest:

1. In granting the preliminary injunction, the District Court ruled that the plaintiffs were likely to prevail in their argument that Congress lacked authority under the Commerce Clause (or any other clause) of the Constitution to impose such sweeping ownership reporting mandates on entities formed under State law. In staying the injunction, the three Circuit Court judges found just the opposite: that at least for companies that affect interstate commerce, the Government was likely to prevail in its argument that the Commerce Clause grants Congress ample authority to impose these mandates.
2. Although preliminary in nature, the Fifth Circuit decision includes an order expediting oral argument on the appeal, which could lead to a speedier ruling on the merits of the Constitutional challenges presented by the plaintiffs.
3. In its Alert reacting to the Fifth Circuit’s temporary lifting of the injunction, FinCEN carved out an exception for those businesses that are parties to this lawsuit, including any company that was a member of the National Small Business Association on March 1, 2024 (the date the suit was filed). The NSBA reports that it has 65,000 total members. Filing obligations for those particular small businesses have been suspended for now. Businesses that joined the NSBA after March 1, 2024, are not covered by this exception.

Questions? Please contact your Verrill attorney or visit our CTA Resource Center page, which will direct you to articles that discuss the CTA mandates in much greater detail.