This blog post is about the Corporate Transparency Act (CTA) – a new law that requires most small businesses to register with the federal government. For a brief overview of the CTA, please see our blog post from early last year.
What You Need to Know:
- The CTA is currently back in effect with a new filing deadline of March 21, 2025
- This deadline is for any business entities formed before February 19, 2025.
- New businesses formed after February 19, 2025, have 30 days to register after their date of formation.
- Deadlines and filing requirements may change suddenly!
- FinCEN is currently “assess[ing] its options to further modify deadlines.”
- The House of Representatives unanimously passed a bill that would extend the deadline to January 2026. However, it still needs to be passed by the Senate before it goes into effect.
- The Fifth Circuit Court of Appeals is still considering the constitutionality of the CTA, with oral arguments currently scheduled for April 1, 2025
- The new Trump administration has indicated support for the law but has suggested it may make changes to reporting requirements.
Should You File?
If you have a business that has not yet registered with FinCEN, it may be prudent to do so now.
The non-filing penalty is a fine of up to $591 for each day that the violation continues.
For existing businesses, while the March 21 deadline could be delayed, it continues to seem more likely that some version of this law will remain in place.
New businesses created after February 19, 2025, must now file within 30 days of formation. Unless the law is placed back on hold, this timeframe seems unlikely to be affected.
Critchfield attorneys are available to assist with CTA compliance, including but not limited to:
- Determining whether your business or any of its owners qualify for exemptions
- Identifying your business’s Beneficial Owners
- Establishing the best approach for businesses with complex corporate structures or owners with sophisticated estate planning arrangements
- Collecting the necessary information and documents
- Submitting your CTA registration
- Establishing systems to ensure that updated reports are submitted on a timely basis
On-Again, Off-Again
As we have reported in previous blog posts about the CTA, the new law has faced numerous legal challenges and has been the subject of numerous holds, reinstatements, and delays. While these legal challenges remain ongoing, the law is back in effect following rulings from the District Court for the Eastern District of Texas and the United States Supreme Court.
On February 19, 2025, FinCEN posted an alert to its BOI page announcing that the new filing deadline is March 21, 2025. However, it also stated that it is going to use the intervening time to “assess its options to further modify deadlines.”
A Tale of Two Cases
The CTA has been subjected to two nationwide injunctions issued in two separate cases. Both of these injunctions are lifted for the time being. To add to the confusion, both of these cases also originated in the federal Court for the Eastern District of Texas:
- Texas Top Cop Shop, Inc. v. Garland– 2024 Case
The injunction under Texas Top Cop Shop was lifted and immediately reinstated by the Fifth Circuit before being lifted again by the United States Supreme Court. Meanwhile, the injunction in Smith has been lifted by the district court that originally issued it.
Either or both injunctions may be reinstated, depending on how the cases are treated in the Fifth Circuit Court of Appeals.
An Updated CTA Timeline
To help summarize the events so far:
January 1, 2024 – CTA became effective. Newly formed entities had 90 days to register after formation, while new entities were required to register before the end of the year.
December 3, 2024 – In Texas Top Cop Shop, the federal Court for the Eastern District of Texas issued a nationwide injunction, placing the enforcement of the CTA on hold. FinCEN announced that CTA filing would be voluntary while the hold remained in effect.
December 23, 2024 – The Fifth Circuit Court of Appeals granted an emergency motion to lift the hold on the CTA, reinstating the law until a final decision could be made on the law’s constitutionality. FinCEN announced that the new filing deadline would be January 13, 2024, for businesses formed before 2024.
December 26, 2024 – The Fifth Circuit Court vacated its earlier ruling. The CTA is placed back on hold until the Fifth Circuit reaches a final decision. FinCEN restates its earlier guidance that filing is voluntary while the law is on hold.
January 1, 2025 – Original filing deadline for businesses formed before 2024.
January 7, 2025 – In Smith, the federal Court for the Eastern District of Texas issued a second, separate nationwide hold on the CTA.
January 23, 2025 – The Supreme Court lifted the hold under Texas Top Cop Shop¸ pending a final decision in the Fifth Circuit. However, the hold under Smith remained in place, continuing to block the law.
February 10, 2025 – The House of Representatives unanimously passed a bill that would extend the filing deadline to January 1, 2026. The House refers the bill to the Senate for further consideration.
February 18, 2025 – The court in Smith lifts its own injunction in response to a motion from the new administration. FinCEN announces a new filing deadline.
March 21, 2025 – New filing deadline for businesses formed before February 19, 2025.
April 1, 2025 – The Fifth Circuit is currently scheduled to hear oral arguments regarding the constitutionality of CTA.
What Does the Future Hold?
The future of the CTA remains uncertain. Cases remain ongoing, new legislation is pending, and federal agencies like FinCEN are currently the subject of unprecedented waves of cuts and shifting policy goals.
In the meantime, it is important to keep informed in case of additional unforeseen developments. Critchfield will continue to closely monitor developments and provide client alerts through www.ccj.com and our various social media channels.
Tagged In:corporate and businesscorporate governanceCorporate Transparency ActFincancial Crimes Enforecement NetworkFinCEN