We have previously shared updates regarding the Corporate Transparency Act (CTA), which generally requires so-called “Reporting Companies” to disclose the individuals who meaningfully control and own such companies to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) via the submission of a Beneficial Ownership Information (BOI) Report. A U.S. District Court in Texas issued a ruling on December 3, 2024 that temporarily suspended the enforcement of the CTA including the requirement to file BOI Reports. On December 23, 2024, this temporary suspension was lifted by a three-judge panel of the Fifth Circuit. This means that Reporting Companies’ obligations to file BOI Reports are now reinstated effective immediately.
FinCEN has responded by (i) extending the filing deadline to January 13, 2025 for existing companies and companies created on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024. For companies created on or after December 3, 2024 and on or before December 23, 2024, they now have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.
The state of the CTA’s enforceability is rapidly evolving. The full panel of the Fifth Circuit could reinstate the District Court’s temporary suspension of the CTA, the U.S. Supreme Court could also be called on to reinstate the suspension, or another federal court could weigh in. For those with Reporting Companies, it would be prudent to be ready to file by the relevant deadlines.
As a reminder:
- Reporting Companies are (i) domestic entities such as corporations and limited liability companies created by the filing of a document with a secretary of state or equivalent with the U.S.; or (ii) foreign entities that have registered to do business in the United States by the filing of a document with a secretary of state or equivalent. Trusts formed as an estate planning tool generally do not qualify as Reporting Companies. Similarly, General Partnerships generally do not qualify as Reporting Companies, while Limited Partnerships, including Limited Liability Partnerships, generally do qualify.
- Pursuant to the CTA, Reporting Companies are required to submit a BOI Report identifying the names and contact information for those who substantially control the company (e.g., CEO, CFO, COO, President, GC, Managing Member) and those who own or control 25% or more of the company. Companies in existence prior to January 1, 2024 have until January 1, 2025 to submit a BOI Report, while companies created in 2024 have 90 days from the date of formation, and companies created in 2025 or later have 30 days. Any changes must be filed within 30 days of the relevant change.
