Corporate Transparency Act is Blocked Again

US Appeals Court Reinstates and Extends Corporate Transparency Act Filing Requirements

Most entities subject to the federal Corporate Transparency Act (“CTA”) beneficial ownership reporting requirements now have until January 13, 2025 to file initial reports with the Financial Crimes Enforcement Network (“FinCen”).

The CTA is an anti-money laundering law passed in 2021 and enforced by FinCEN, a bureau of the U.S. Treasury Department. The CTA requires certain entities, or “reporting companies,” to report to FinCEN identifying information about the individuals who ultimately own or control them. FinCEN issued beneficial ownership reporting rules that took effect in 2024 but gave entities formed before January 1, 2024 until January 1, 2025 to make their initial filings; entities formed in 2024 were given 90 days. (For more information about these rules, see the alert we issued earlier this year.)

Implementation of the reporting requirements has been in flux for the last several weeks, however. Earlier this month, with the deadline fast approaching for millions of reporting companies yet to file, a federal district court in Texas in Texas Top Cop Shop, Inc. v. Garland ruled that the CTA was unconstitutional and issued a nationwide preliminary injunction, putting enforcement of the FinCen rules on hold. The federal government appealed. On December 23, a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit granted a stay of the district court’s injunction, pending the outcome of the government’s appeal – meaning that reporting companies would have to file beneficial ownership information by FinCen’s initial deadline.

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The federal Corporate Transparency Act (CTA) requires a “Reporting Company” to disclose certain identifying information about beneficial owners and company applicant(s) to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to be stored in FinCEN’s secure nonpublic database, known as the “Beneficial Ownership Secure System” (BOSS). Reporting Companies formed before January 1, 2024 are required to register with FinCEN by January 1, 2025. Reporting Companies formed on or after January 1, 2024 are required to register with FinCEN within 90 days of formation.

The CTA applies both to US entities and to foreign entities doing business in the United States. The purpose of the CTA is to increase transparency into entity ownership to counter money laundering and other illicit activities. Compliance with the CTA is mandatory and the penalties for knowing non-compliance can be severe, including criminal penalties and imprisonment. There will be no filing fee for submitting beneficial ownership information.

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The federal Corporate Transparency Act (“CTA”) will be going into effect on January 1, 2024. The CTA will require a “Reporting Company” to disclose certain identifying information about beneficial owners and company applicant(s) to the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) to be stored in FinCEN’s secure nonpublic database, known as the “Beneficial Ownership Secure System” (“BOSS”). Reporting Companies formed before January 1, 2024 are required to register with FinCEN by January 1, 2025. Reporting Companies formed on or after January 1, 2024 are required to register with FinCEN within 90 days of formation.

The CTA applies both to US entities and to foreign entities doing business in the United States. The purpose of the CTA is to increase transparency into entity ownership to counter money laundering and other illicit activities. Compliance with the CTA is mandatory and the penalties for knowing non-compliance can be severe, including criminal penalties and imprisonment. There will be no filing fee for submitting beneficial ownership information.

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