The Corporate Transparency Act: An Ongoing Saga

If you’ve been following the progress of the Corporate Transparency Act, and more specifically, the related Beneficial Ownership Reporting requirements, you’ll know that the past handful of weeks have been a busy time. Initially passed in 2021, the Act was enacted to combat bad actors from forming shell companies to hide fraudulent or otherwise illicit financial activities, and required small businesses to report “Beneficial Ownership Information” to the Financial Crimes Enforcement Network (“FinCEN”). This information was originally required to be filed before January 1, 2025.

The reporting requirements received multiple legal challenges, ultimately resulting in a Texas Federal District Court Judge placing an injunction on the requirements in December of 2024. Thereafter, the Fifth Circuit Court of Appeals lifted the injunction, making the reporting requirements once again mandatory, and the filing deadline was extended to January 13, 2025. Just days later however, the Fifth Circuit reversed their decision, reinstating the injunction. This rollercoaster of events may not be over quite yet either, as the U.S. Justice Department has since requested that the Supreme Court to again lift the injunction. But for now, the injunction remains in place. 

The latest update in this process came in the form of a bill passed unanimously by the House of Representatives earlier this week on February 10th, which if passed by the senate, would extend the reporting deadline for companies formed before January 1, 2024, by one year to January 1, 2026.

This rapid change of events and reversal of decisions has only further muddied the waters for requirements that had already left many small business owners puzzled. As we wait for further news, businesses are still able to voluntarily report their Beneficial Ownership Information despite the stay.

For information on what the reporting requirements entail, see the following: https://fincen.gov/boi