CTA Beneficial Ownership Information Reporting Requirements Resume March 21, 2025; Preliminary Injunctions Lifted

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On February 18, the U.S. District Court for the Eastern District of Texas lifted the preliminary injunction against enforcement of the Corporate Transparency Act (CTA) and the beneficial ownership reporting rule promulgated thereunder (Reporting Rule) previously granted by that court in the case styled Smith v. U.S. Department of Treasury. In response, on February 19, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) extended the deadline to March 21, 2025, for non-exempt reporting companies to file their initial, updated or corrected beneficial ownership information (BOI) reports.

The order (found here) indicates that the decision was made to conform with the U.S. Supreme Court’s January 23, decision to lift the nationwide injunction entered in the case styled Texas Top Cop Shop v. McHenry. However, FinCEN has indicated that it will consider administrative options to modify reporting deadlines to prioritize reporting for entities that pose “the most significant national security risks.” It has also announced plans to revise the Reporting Rule to reduce the burden on “lower-risk” entities.

As of now, reporting companies must adhere to the following reporting deadlines:

  • Formed prior to January 1, 2024: March 21, 2025.
  • Formed in 2024: The later of (1) 90 days following the date of formation or (2) March 21, 2025.
  • Formed on or after January 1, 2025: The later of (1) 30 days following the date of formation or (2) March 21, 2025.

In the background, the U.S. House of Representatives recently passed H.R. 736 – Protect Small Businesses from Excessive Paperwork Act of 2025. The bill, which passed the House 408-0, would defer implementation of the Reporting Rule to January 1, 2026, for reporting companies formed prior to January 1, 2024. The Senate is also considering S.B. 505, a companion bill introduced by Senator Tim Scott (South Carolina) on February 11. However, the potential statutory relief, if enacted, would not apply to reporting companies formed on or after January 1, 2024.

Unless they are subject to a later deadline, reporting companies that are not exempt from the Reporting Rule should be prepared to file their BOI reports by March 21, 2025.

Summary of CTA Developments Since December 1, 2024

  • December 3, 2024: The U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against the enforcement of the CTA in Top Cop Shop based on constitutional grounds.
  • December 23, 2024: The U.S. Court of Appeals for the Fifth Circuit stayed Top Cop Shop’s nationwide preliminary injunction – reinstating the CTA and Reporting Rule. In light of the injunction, FinCEN extended certain reporting deadlines.
  • December 26, 2024: In a separate order entered by another panel of judges, the Fifth Circuit vacated the portion of its December 23 order lifting the Top Cop Shop injunction – reinstating the district court’s nationwide injunction.
  • January 7, 2025: The U.S. District Court for the Eastern District of Texas entered an order staying the effective date of the Reporting Rule pursuant to the Administrative Procedure Act in Smith.
  • January 23, 2025: The U.S. Supreme Court stayed the Top Cop Shop preliminary injunction after the government filed an emergency application.
  • January 24, 2025: FinCEN announced that reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop as long as the Smith order remains in place.
  • February 10, 2025: The House passed H.R. 736 by a vote of 408-0.
  • February 11, 2025: Senator Tim Scott introduced S.B. 505, a companion bill to H.R. 736.
  • February 18, 2025: In light of the January 23 Supreme Court Top Cop Shop order, the U.S. District Court for the Eastern District of Texas entered an order staying the Smith injunction.
  • February 19, 2025: FinCEN announced its extension of the BOI report deadline to March 21, 2025.

While the recent decisions may have been a blow to critics of the CTA, the ultimate fate of the CTA remains unpredictable amid ongoing litigation and new legislation. Notably, neither the Supreme Court opinion nor the order staying the Smith injunction addressed the constitutionality of the CTA and the Reporting Rule. As noted in a previous alert, the rationale of at least some of the Supreme Court justices appears to be based on rules of judicial procedure (i.e., the propriety of nationwide injunctions issued by a single federal district court) rather than on the substantive merits of the claims made in Top Cop Shop or Smith about the constitutionality of the CTA.

With the temporary relief from Top Cop Shop and Smith gone, the appellate proceedings in National Small Business United v. Yellen (NSBA) currently playing out in the Eleventh Circuit Court of Appeals bear particular attention. Oral arguments in NSBA occurred in November and the Eleventh Circuit could decide soon on the merits regarding the constitutionality of the CTA. Although the Fifth Circuit has expedited briefing in the Top Cop Shop appeal, any decision in that case will be rendered after the March 21 deadline imposed by FinCEN since oral arguments are not set to occur until April 1.

Further frustrating efforts to predict the trajectory of the CTA, the bipartisan passing of H.R. 736 by the U.S. House, and subsequent introduction in the U.S. Senate of S.B. 505 appear to indicate a willingness from the legislative branch to reconsider the burdens of the CTA’s reporting obligations on companies. Additionally, the February 19 pronouncements by FinCEN indicate the apparent intention of the Trump administration to narrow the scope of the Reporting Rule by regulatory action. Many Republican State Attorneys General also filed amicus appellate briefs in the Top Cop Shop case asserting the unconstitutionality of the CTA. While the CTA’s implementation remains difficult to predict, the March 21 deadline is currently applicable to the estimated 25 million reporting companies that have not yet filed an initial beneficial ownership report with FinCEN.

Our CTA Task Force will continue to monitor for relevant developments, with periodic updates accessible on our CTA resource page. If you have any questions or need advice about the CTA or its application to your business, please contact one of the members of the CTA Task Force or your primary Bass, Berry & Sims attorney.

This alert is not intended to, and does not, provide legal, compliance or other advice to any person, and receipt of this document does not constitute the establishment of an attorney-client relationship. The information and analysis set forth in this document are subject to change based on new regulations and regulatory guidance, and other circumstances. Applicability of the CTA can be subject to a detailed factual analysis. Entities and individuals should consult with their attorney for specific CTA advice.  

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On February 18, the U.S. District Court for the Eastern District of Texas lifted the preliminary injunction against enforcement of the Corporate Transparency Act (CTA) and the beneficial ownership reporting rule promulgated thereunder (Reporting Rule) previously granted by that court in the case styled Smith v. U.S. Department of Treasury. In response, on February 19, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) extended the deadline to March 21, 2025, for non-exempt reporting companies to file their initial, updated or corrected beneficial ownership information (BOI) reports.

The order (found here) indicates that the decision was made to conform with the U.S. Supreme Court’s January 23, decision to lift the nationwide injunction entered in the case styled Texas Top Cop Shop v. McHenry. However, FinCEN has indicated that it will consider administrative options to modify reporting deadlines to prioritize reporting for entities that pose “the most significant national security risks.” It has also announced plans to revise the Reporting Rule to reduce the burden on “lower-risk” entities.

As of now, reporting companies must adhere to the following reporting deadlines:

  • Formed prior to January 1, 2024: March 21, 2025.
  • Formed in 2024: The later of (1) 90 days following the date of formation or (2) March 21, 2025.
  • Formed on or after January 1, 2025: The later of (1) 30 days following the date of formation or (2) March 21, 2025.

In the background, the U.S. House of Representatives recently passed H.R. 736 – Protect Small Businesses from Excessive Paperwork Act of 2025. The bill, which passed the House 408-0, would defer implementation of the Reporting Rule to January 1, 2026, for reporting companies formed prior to January 1, 2024. The Senate is also considering S.B. 505, a companion bill introduced by Senator Tim Scott (South Carolina) on February 11. However, the potential statutory relief, if enacted, would not apply to reporting companies formed on or after January 1, 2024.

Unless they are subject to a later deadline, reporting companies that are not exempt from the Reporting Rule should be prepared to file their BOI reports by March 21, 2025.

Summary of CTA Developments Since December 1, 2024

  • December 3, 2024: The U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against the enforcement of the CTA in Top Cop Shop based on constitutional grounds.
  • December 23, 2024: The U.S. Court of Appeals for the Fifth Circuit stayed Top Cop Shop’s nationwide preliminary injunction – reinstating the CTA and Reporting Rule. In light of the injunction, FinCEN extended certain reporting deadlines.
  • December 26, 2024: In a separate order entered by another panel of judges, the Fifth Circuit vacated the portion of its December 23 order lifting the Top Cop Shop injunction – reinstating the district court’s nationwide injunction.
  • January 7, 2025: The U.S. District Court for the Eastern District of Texas entered an order staying the effective date of the Reporting Rule pursuant to the Administrative Procedure Act in Smith.
  • January 23, 2025: The U.S. Supreme Court stayed the Top Cop Shop preliminary injunction after the government filed an emergency application.
  • January 24, 2025: FinCEN announced that reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop as long as the Smith order remains in place.
  • February 10, 2025: The House passed H.R. 736 by a vote of 408-0.
  • February 11, 2025: Senator Tim Scott introduced S.B. 505, a companion bill to H.R. 736.
  • February 18, 2025: In light of the January 23 Supreme Court Top Cop Shop order, the U.S. District Court for the Eastern District of Texas entered an order staying the Smith injunction.
  • February 19, 2025: FinCEN announced its extension of the BOI report deadline to March 21, 2025.

While the recent decisions may have been a blow to critics of the CTA, the ultimate fate of the CTA remains unpredictable amid ongoing litigation and new legislation. Notably, neither the Supreme Court opinion nor the order staying the Smith injunction addressed the constitutionality of the CTA and the Reporting Rule. As noted in a previous alert, the rationale of at least some of the Supreme Court justices appears to be based on rules of judicial procedure (i.e., the propriety of nationwide injunctions issued by a single federal district court) rather than on the substantive merits of the claims made in Top Cop Shop or Smith about the constitutionality of the CTA.

With the temporary relief from Top Cop Shop and Smith gone, the appellate proceedings in National Small Business United v. Yellen (NSBA) currently playing out in the Eleventh Circuit Court of Appeals bear particular attention. Oral arguments in NSBA occurred in November and the Eleventh Circuit could decide soon on the merits regarding the constitutionality of the CTA. Although the Fifth Circuit has expedited briefing in the Top Cop Shop appeal, any decision in that case will be rendered after the March 21 deadline imposed by FinCEN since oral arguments are not set to occur until April 1.

Further frustrating efforts to predict the trajectory of the CTA, the bipartisan passing of H.R. 736 by the U.S. House, and subsequent introduction in the U.S. Senate of S.B. 505 appear to indicate a willingness from the legislative branch to reconsider the burdens of the CTA’s reporting obligations on companies. Additionally, the February 19 pronouncements by FinCEN indicate the apparent intention of the Trump administration to narrow the scope of the Reporting Rule by regulatory action. Many Republican State Attorneys General also filed amicus appellate briefs in the Top Cop Shop case asserting the unconstitutionality of the CTA. While the CTA’s implementation remains difficult to predict, the March 21 deadline is currently applicable to the estimated 25 million reporting companies that have not yet filed an initial beneficial ownership report with FinCEN.

Our CTA Task Force will continue to monitor for relevant developments, with periodic updates accessible on our CTA resource page. If you have any questions or need advice about the CTA or its application to your business, please contact one of the members of the CTA Task Force or your primary Bass, Berry & Sims attorney.

This alert is not intended to, and does not, provide legal, compliance or other advice to any person, and receipt of this document does not constitute the establishment of an attorney-client relationship. The information and analysis set forth in this document are subject to change based on new regulations and regulatory guidance, and other circumstances. Applicability of the CTA can be subject to a detailed factual analysis. Entities and individuals should consult with their attorney for specific CTA advice.  

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