On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit issued a decision that reinstates the Corporate Transparency Act (CTA) reporting requirements for most entities, following a stay of the preliminary injunction granted earlier this month. This decision has significant implications for reporting companies subject to the CTA’s beneficial ownership information (BOI) reporting requirements.
To accommodate reporting companies impacted by the legal uncertainties during the injunction period, the Department of the Treasury has announced revised deadlines for compliance. Below are the updated deadlines and key details.
Revised Reporting Deadlines
1. Entities Created or Registered Prior to January 1, 2024:
- Deadline to file initial BOI reports extended to January 13, 2025 (previously January 1, 2025).
2. Entities Created or Registered Between September 4, 2024, and December 23, 2024:
- If the filing deadline fell between December 3, 2024, and December 23, 2024, the deadline is extended to January 13, 2025.
3. Entities Created or Registered Between December 3, 2024, and December 23, 2024:
- Entities have an additional 21 days from their original filing deadline to submit their initial BOI reports.
4.Entities Qualifying for Disaster Relief:
- These entities may have further extended deadlines beyond January 13, 2025, as applicable.
5.Entities Created or Registered On or After January 1, 2025:
- These entities must file initial BOI reports within 30 days of receiving actual or public notice of their creation or registration.
Exemptions for Specific Plaintiffs
Entities and individuals involved in the ongoing litigation in National Small Business United v. Yellen are not currently required to report BOI information. This includes:
- Isaac Winkles and reporting companies where he is a beneficial owner.
- Members of the National Small Business Association as of March 1, 2024.
Legal Context and Court Decisions
1. Nationwide Injunction: On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction in Texas Top Cop Shop, Inc. v. Garland enjoining the enforcement of the CTA nationwide. This decision created significant uncertainty for reporting companies.
2. Reinstatement of the CTA: On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit stayed the district court’s injunction, allowing the CTA and its reporting requirements to be enforced once again.
3. Ongoing Legal Challenges:
- Several cases challenging the constitutionality of the CTA remain pending in federal courts.
- The Department of the Treasury and Department of Justice maintain that the CTA is constitutional, as supported by decisions in other jurisdictions, including the Eastern District of Virginia and District of Oregon.
Action Items for Reporting Companies
- Review Deadlines: Ensure compliance with the revised reporting deadlines outlined above.
- Verify Exemptions: Determine if your company qualifies for an exemption based on involvement in specific litigation or disaster relief.
- Prepare BOI Reports: Use this additional time to gather and verify beneficial ownership information to avoid penalties for non-compliance.
- Monitor Developments: Stay informed of further legal updates as additional rulings may impact the enforcement and requirements of the CTA.
If you would like more information regarding this topic please contact Thomas S. Tripodianos at ttripodianos@wbgllp.com or call (914) 607-6440
