Legal Bulletins

CTA Latest Update: Injunction lifted, New deadlines for compliance

As we have previously alerted you, the Corporate Transparency Act (CTA), which obligates certain companies to file Beneficial Ownership Information Reports (BOIR) regarding their beneficial owners, was declared “likely unconstitutional” by a United States District Court in Texas on December 3, 2024. As a result of the U.S. District Court’s ruling in Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.), enforcement of the CTA by the Financial Crimes Enforcement Network (FinCEN) was enjoined. The government subsequently filed a notice of appeal and a motion for a stay on the injunction.  

On December 23, 2024, the United States Court of Appeals for the Fifth Circuit granted the government’s motion for a stay of the injunction pending appeal (Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 24-40792 (5th Cir. 2023) (Unpublished Opinion)). According to the Court of Appeals, the government “made a strong showing that it is likely to succeed on the merits in defending the CTA’s constitutionality” because the CTA regulates “an economic class of activities that have a substantial effect on interstate commerce.” The Court of Appeals did not grant an extension of the applicable filing deadlines to account for the roughly two-and-a-half weeks the CTA injunction was in effect.

Later on December 23, 2024, FinCEN addressed the Fifth Circuit order on its BOI E-Filing System webpage (https://boiefiling.fincen.gov/) and stated that, in light of the Court of Appeals decision, reporting companies (other than companies that qualify for disaster relief) are once again required to file beneficial ownership information with FinCEN. FinCEN did, however, recognize that reporting companies may need additional time to comply given the period the preliminary injunction was in effect, and therefore extended the filing deadlines as follows:

• Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)
   
• Reporting companies created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.
   
• Reporting companies created or registered in the United States on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.
   
• Reporting companies that are created or registered in the United States on or after January 1, 2025 have 30 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.

We will continue to monitor this closely and provide updates as they become available. For more information concerning the CTA and its reporting requirements, please contact James McKittrick or Michele Walsh. 

James J. McKittrick, Jr.
410-576-4134 • jmckittrick@gfrlaw.com

Michele Bresnick Walsh
410-576-4216 • mwalsh@gfrlaw.com