After the issuance of an order by the United States Court of Appeals for the Fifth Circuit (the “Appeals Court”), entities are once again required to comply with the reporting requirements of the Corporate Transparency Act (the “CTA”). The new deadline for most companies to comply with the CTA is January 13, 2025. Failure to timely and accurately file the required disclosure will result in severe penalties.
The CTA, which went into effect on January 1, 2024, required many entities that were formed prior to January 1, 2024 to disclose the identity of their individual beneficial owners to the Financial Crimes Enforcement Network, a bureau of the United States Department of the Treasury (“FinCEN”), before January 1, 2025. Additionally, the CTA requires nearly all entities formed on or after January 1, 2024 to disclose the identity of their individual beneficial owners to FinCEN within 90 days of formation.
On December 3, 2024, the United States District Court for the Eastern District of Texas (the “Lower Court”) issued a preliminary injunction in favor of the plaintiffs in the case of Texas Top Cop Shop, Inc. v. Garland, E.D. Tex., No. 4:24-cv-00478-ALM. In the Texas Top Cop Shop case, the Lower Court issued a nationwide injunction against the enforcement of the CTA, stating, “reporting companies need not comply with the CTA’s January 1, 2025, [Beneficial Ownership Information] reporting deadline pending further order of the Court.”
On December 13, 2024, the United States Department of Justice (the “DOJ”) filed an emergency motion with the Appeals Court to stay the nationwide temporary preliminary injunction issued by the Lower Court in the Texas Top Cop Shop case.
On December 23, 2024, the Appeals Court granted the DOJ’s emergency motion to stay the nationwide temporary preliminary injunction. As a result, the CTA is effective, and entities are required to comply with the reporting requirements of the CTA.
Recognizing the burden that the last-minute reversal by the Appeals Court presents to reporting companies, FinCEN has already announced the following reporting deadline extensions:
- Reporting entities 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 entities would otherwise have been required to report by January 1, 2025).
- Reporting entities 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 entities 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 entities that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025. These companies should abide by whichever deadline falls later.
- Reporting entities 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.
Please contact our Business and Tax Law Practice Group to ensure your business complies with the CTA.
See our previous blogs for more information on the CTA:
- Pulling Back the Curtains on Business Entities: The Corporate Transparency Act
- Reminder: Corporate Transparency Act Compliance Deadline is December 31, 2024 (or Sooner)
- Alabama Federal District Court Rules the Corporate Transparency Act Unconstitutional — What Does It Mean for Your Business?
Steven Land is an attorney in Cooper Levenson’s Business & Tax practice group in its Atlantic City office. He concentrates his practice on business transactions, mergers and acquisitions, tax matters, and estate planning and administration. Steven may be reached at (609) 572-7530 or via e-mail at sland@cooperlevenson.com.