CTA Situationship Tracker: Eastern District of Texas Lifts Stay
(FinCEN Acknowledges Faults, Working on Themselves)
March 3, 2025
By: Jay Phillips
The Corporate Transparency Act (“CTA”) reporting obligations are once again reinstated. On February 18, 2025, the U.S. District Court for the Eastern District of Texas issued a decision in Smith, et al. v. U.S. Department of the Treasury, et al., No. 6:24-cv-00336 (E.D. Tex.), impacting beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA). This order relied on the recent Supreme Court order in McHenry v. Texas Top Cop Shop, Inc., No. 24A653, 604 U.S. (U.S. Jan 23, 2025). Following this ruling, the U.S. Department of the Treasury has reaffirmed that BOI reporting obligations remain in effect but has granted an additional 30 calendar days from February 19, 2025, for most reporting companies to comply.
- Extended Reporting Deadlines
- Most reporting companies now have until March 21, 2025, to file their initial, updated, or corrected BOI reports.
- Companies that previously had a reporting deadline after March 21, 2025 (e.g., due to disaster relief extensions), should follow their originally assigned later deadline rather than the March 21 deadline—it is unclear as to whether the disaster relief extensions will be extended into Kentucky Counties recently impacted by significant flooding.
- Commitment to Regulatory Relief
FinCEN has acknowledged concerns regarding the regulatory burden on small businesses and lower-risk entities. As a result, during this 30-day extension period, FinCEN will:
- Assess Options to further modify deadlines, prioritizing reporting fdrom entities posing higher national security risks.
- Begin a rulemaking process in 2025 to revise BOI reporting requirements, aiming to reduce compliance burdens for small businesses and lower-risk entities.
- Litigation Exemptions
As noted in FinCEN’s prior alert regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.), certain plaintiffs—including the National Small Business Association, and its members as of March 1, 2024—are not required to file BOI reports at this time.
- Reporting Requirements Refresher
As a reminder, the CTA requires business owners to file Beneficial Ownership Information Reports, or “BOIRs”, with the Department of the Treasury’s Financial Crimes Enforcement Network. Beneficial owners include individuals who own more than 25% of the entity or maintain substantial control over business decisions in the entity. For more information on the nitty gritty of the requirements, see our November 11, 2024 blog linked here.[1]
CONCLUSION AND ACTION STEPS
Companies should continue to stay informed about further legal developments as the legal framework surrounding the Corporate Transparency Act may shift again. It’s essential to maintain close communication with legal counsel to evaluate the implications of this evolving landscape and begin working with counsel to properly identify Beneficial Owners or Company Applicants.
For further information or assistance in understanding your obligations under the CTA, please contact our team. We are here to help you stay compliant in a rapidly changing regulatory environment.
Disclaimer: This blog is for informational purposes only and does not constitute legal advice. Always consult with a qualified attorney for guidance tailored to your specific circumstances.