On February 17, 2025, the U.S. District Court for the Eastern District of Texas lifted its own stay (sound familiar?) on the Beneficial Ownership Information (“BOI”) reporting obligations ordered on January 7, 2025, in Smith v. U.S. Dep’t of the Treasury, thereby effectively reinstating the BOI reporting requirements. As a result, subject to a decision on the merits of its constitutionality, the Corporate Transparency Act (“CTA”) and its BOI reporting obligations are once again mandatory for non-exempt U.S.-registered businesses.
Recognizing reporting companies’ need for additional time to comply with the reinstated reporting obligations, the Financial Crimes Enforcement Network (“FinCEN”) has set March 21, 2025, as the new BOI reporting deadline, unless subject to a later deadline, such as those reporting companies qualified for certain disaster relief extensions.
FinCEN intends to continue evaluating potential options and modifications to the reporting deadlines, while in the interim prioritizing filings from entities that pose significant national security risks.
Background
On January 7, 2025, in Smith v. U.S. Dep’t of the Treasury, the U.S. District Court for the Eastern District of Texas issued a stay on the effective date of the CTA’s BOI reporting deadline.
On January 23, 2025, in McHenry v. Texas Top Cop Shop, Inc., the U.S. Supreme Court stayed the nationwide preliminary injunction that was also issued by the U.S. District Court for the Eastern District of Texas which blocked the enforcement of CTA. Nevertheless, the nationwide injunction issued on January 7, 2025, in Smith, remained intact, as detailed in our previous client alerts.
On February 5, 2025, the government filed a motion to stay the Smith injunction. In light of the U.S. Supreme Court’s stay order in Texas Top Cop Shop, U.S. District Court Judge Jeremy D. Kernodle lifted the Smith injunction pending the appeal, thereby eliminating all active nationwide injunctions against the CTA.
In addition to outstanding appeals in multiple federal appellate courts, such as in the U.S. Court of Appeals for the Fifth Circuit, Congress has also made a push to advocate for U.S. businesses. On February 10, 2025, the U.S. House of Representatives (“House”) unanimously passed H.R.736, which would give FinCEN the authority to extend the compliance deadline to January 1, 2026. The action is currently pending in the U.S. Senate. Legislation to repeal the CTA has also been introduced in the House.
In spite of the extant challenges to the CTA, businesses impacted by the CTA should prepare now to meet the March 21 deadline.
Leech Tishman is closely monitoring these legal proceedings and related cases and actions challenging the constitutionality and enforcement of the CTA and will update clients as new developments occur.
Alexander J. Gase is a Partner in Leech Tishman’s Corporate Practice Group and is based out of the firm’s Pittsburgh office. He can be reached at agase@leechtishman.com.
Elissa Steiner is an Associate in Leech Tishman’s Corporate Practice Group and is based out of the firm’s Pittsburgh office. She can be reached at esteiner@leechtishman.com.