On February 18, 2025, the U.S. District Court for the Eastern District of Texas lifted the nationwide injunction that had previously halted the enforcement of the Corporate Transparency Act (“CTA”). This decision reinstates the requirement for businesses to report beneficial ownership information to the Financial Crimes Enforcement Network (“FinCEN”).
Background on the Corporate Transparency Act
In recent months, the Corporate Transparency Act (CTA) has been the subject of ongoing litigation, creating confusion and uncertainty for business owners. The law, which mandates that certain entities disclose their beneficial owners to FinCEN, was initially blocked by a Texas federal court ruling in late 2024. For a full background on the CTA and prior court rulings, you can review our previous alert : Texas Blocks Enforcement of Corporate Transparency Act.
Updated Reporting Deadlines
With the lifting of the injunction, the CTA’s provisions take effect once more. In response to the reinstatement, FinCEN has extended the reporting deadlines to provide businesses with additional time to comply:
- Existing Entities (formed or registered before February 19, 2025): The deadline to file initial beneficial ownership information reports has been extended to March 21, 2025.
- New Entities (formed or registered on or after February 19, 2025): These entities will have 30 days from receiving notice of their creation or registration to file their initial reports.
Visit FinCEN’s website for information on how to file initial beneficial ownership information.
Implications for U.S. Businesses
With the CTA’s enforcement back in effect, an estimated 32.6 million small businesses are now required to comply with the reporting requirements. Failure to comply can result in serious penalties, including fines up to $10,000.
Next Steps for Businesses
Given the reinstatement of the CTA, businesses should promptly prepare to meet the reporting obligations by the specified deadlines. This includes gathering necessary information about beneficial owners and submitting it to FinCEN within the required timeframes.
Navigate Corporate Transparency Act Compliance with ByrdAdatto
At ByrdAdatto, we stay up to date on regulatory developments to help our clients navigate the complexities of compliance and business operations. Contact ByrdAdatto for guidance on these changes.
