By Linda R. Brower, Esq., Senior Counsel, Commercial Transactions

What Happened

On December 23, 2024, the Fifth Circuit Court of Appeals lifted the preliminary injunction imposed by a U.S. District Court in Texas earlier in the month that had stopped all required reporting under The Corporate Transparency Act (the Act).

On December 3, 2024, a U.S. District Court in Texas, in a first-of-its-kind ruling under the Act, issued a nationwide preliminary injunction “pausing” all mandatory reporting by reporting companies under the Act, after finding that plaintiffs in the case had demonstrated a likelihood that the Act was unconstitutional.

The Department of Justice (DOJ) took an emergency appeal to the Fifth Circuit Court, requesting an emergency stay of the lower court’s injunction order pending a final decision of the merits of the case which could take months or longer to resolve. After an expedited briefing schedule, the Fifth Circuit Court lifted the injunction against enforcement of the Act on December 23, 2024, finding that the DOJ had met its burden to demonstrate the likelihood of success on the merits that the Act is constitutional.

What’s Next

Immediately following the decision by the Fifth Circuit Court of Appeals, FinCEN issued a Press Release and a revised schedule for entities subject to the Act to file their required Beneficial Ownership Information Reports (BOI Report).

FinCEN issued the following information and filing extensions for initial BOI Reports:

• For reporting companies existing prior to January 1, 2024, the filing deadline is now January 13, 2025, instead of January 1, 2025;
• Reporting companies created or registered in the United States on or after September 4, 2024, that had an initial filing deadline between December 3, 2024 and December 23, 2024, now have until January 13, 2025, to file their initial BOI Reports;
• Reporting companies 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 BOI Reports;
• Reporting companies that qualify for disaster relief may have extended deadlines that fall after January 13, 2025, and their initial filing deadline is now extended to whichever deadline is later;
• Reporting companies that are created or registered in the United States on or after January 1, 2025, have 30 days to file their initial BOI Reports (after receiving actual or public notice of effective creation or registration).

The Press Release did not address reporting companies that are created or registered in the United States on or after December 24, 2024 through December 31, 2024. Accordingly, we presume that these companies should report within 90 days of the notice of effective formation/registration in accordance with the Act’s original reporting requirements.

No extension was announced for entities formed on or after January 1, 2025. These reporting companies will have 30 days from notice of effective formation/registration to file initial BOI Reports in accordance with the Act’s original reporting requirements.

For further information about the Act and its reporting requirements, please refer to the News and Resources sections of our website. We will continue to monitor developments under the Act and report on them as they occur.

This communication is not a full analysis of the matters presented and should not be relied upon as legal advice and could be considered attorney advertising.