The Federal Corporate Transparency Act
On January 1, 2024, the Federal Corporate Transparency Act (the “Act”) went into effect. The Act establishes new requirements under which domestic reporting companies must file a Beneficial Ownership Information (“BOI”) Report with the United States Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). Originally, under the Act, domestic reporting companies formed before January 1, 2024, were required to submit their initial BOI Reports by January 1, 2025 (the “Reporting Rule”).
Injunction and Stay from the Eastern District of Texas
On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide injunction enjoining the United States government from enforcing the Act and the Reporting Rule. The court also issued a nationwide stay for enforcement of the Reporting Rule’s January 1, 2025, deadline, having determined that “[j]ust as the injunction against enforcement of the CTA should apply nationwide, a stay of the Reporting Rule should apply nationwide.”
Pausing of Injunction
On February 18, 2025, the Eastern District of Texas in Smith v. US Department of the Treasury, No. 6:24-cv-336-JDK, entered an order staying (pausing) the nationwide preliminary injunction against enforcement of the Beneficial Ownership Information Reporting Requirements final rule (31 C.F.R. 1010.380) (Reporting Rule) promulgated under the Corporate Transparency Act (CTA) (31 U.S.C. § 5336).
Extension of Filing Requirements
As a result of the stay, reporting companies, subject to limited exceptions, are once again required to file beneficial ownership information with FinCEN.
FinCEN extended the deadline 30 calendar days from February 19, 2025, for most reporting companies to file BOI reports. The current reporting deadlines are as follows:
- Non-exempt reporting companies formed on or before February 19, 2025 (including entities formed before the CTA went into effect in 2024), will have until March 21, 2025, to file their BOI reports.
- Non-exempt reporting companies formed after February 19, 2025, will have 30 days from their formation/registration to file their BOI reports (unless they otherwise qualify for a later deadline, e.g., disaster relief extension).
Going Forward
As a result of the stay, reporting companies that have yet to file their initial BOI with FinCEN should determine the date by which they must file their initial BOI and ensure that such filing is completed timely. Failure to file by the extended deadlines may expose the reporting company to significant penalties under the Act.
For further information on where and how to file, please visit the U.S. Financial Crimes Enforcement Network’s website at: https://fincen.gov/boi.
If you wish to have our Costello, Cooney & Fearon assist you with this matter, please contact your primary attorney at your earliest convenience. Note that the Firm will not be undertaking to file any BOI reports without discussing the matter with you first and agreeing that the firm will undertake to handle this matter for you.
URGENT UPDATE
On March 2, 2025, the Treasury Department announced that, with respect to the Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either. The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.
This is a developing matter. Costello, Cooney & Fearon, PLLC will post additional updates as they become available.