I was hoping that I could report to my readers that the turbulent and lengthy ride of the Corporate Transparency Act (“CTA”) was, one way or another, finally over! Unfortunately, I am unable to deliver that news today. Instead, I am briefly reporting on the most recent development in the crazy saga.
From previous reporting, you may recall that, on January 23, 2025, the U.S. Supreme Court, in Texas Top Cop Shop, Inc. et al v. Merrick Garland, Attorney General of the United States et al., lifted the Fifth Circuit’s injunction, that was preventing the government from enforcing the CTA. However, as also reported, the SCOTUS decision had no practical impact on the government’s ability to enforce the CTA because another court (the Eastern District of Texas) in a different case (Smith et. al. v. U.S. Department of Treasury et. al.) had issued (on January 7, 2025) a nationwide injunction against the government’s enforcement of the CTA. Accordingly, that court’s injunction, despite the high court’s decision in Texas Top Cop Shot, Inc., remained in place.
Fast forward a few weeks. On February 5, 2025, the U.S. Department of Justice filed a notice of appeal of the Eastern District of Texas court’s order in the Smith case and asked the appeals court to lift the injunction during the pendency of its appeal. Yesterday, February 18, 2025, the court granted the government’s request, lifting the injunction pending the appeal.
In plain English, yesterday’s court decision means the CTA is back in play. Accordingly, FinCEN can once again commence enforcing the mandatory reporting requirements under the CTA. The CTA beneficial reporting requirements are once again back in effect. The Abbott and Costello “Who’s On First” comedy continues!
FinCEN reported today on its website that:
“…because the Department of the Treasury (Treasury) recognizes that reporting companies may need additional time to comply with their BOI reporting obligations, FinCEN is generally extending the deadline 30 calendar days from February 19, 2025, for most companies. Notably, in keeping with Treasury’s commitment to reducing regulatory burden on businesses, during this 30-day period FinCEN will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks. FinCEN also intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses.”
This recent development means, according to FinCEN, that, with limited exception[1], reporting companies have until March 21, 2025 (30 days after February 19, 2025) to comply with the CTA. Unless SCOTUS decides that the CTA is unconstitutional, it may be here to stay. All reporting companies need to carefully examine their reporting obligations and make sure, if they have a reporting obligation, that they satisfy it in a timely fashion. As I have repeatedly reported, the penalties for noncompliance are significant.
I will continue to report on any new developments relative to the CTA.
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[1] One exception applies to the plaintiffs in National Small Business United v. Yellen (N.D. Ala.). In essence, as a result of the Alabama court’s order, the members of the National Small Business Association, existing as of March 1, 2024, are not required to report. That, of course, may change if the SCOTUS ultimately decides the CTA is constitutional.
PrincipalLarry is Chair of the Foster Garvey Tax & Benefits practice group. He is licensed to practice in Oregon and Washington. Larry's practice focuses on assisting public and private companies, partnerships, and high-net-worth ...
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Larry J. Brant
Editor
Larry J. Brant is a Shareholder and the Chair of the Tax & Benefits practice group at Foster Garvey, a law firm based out of the Pacific Northwest, with offices in Seattle, Washington; Portland, Oregon; Washington, D.C.; New York, New York, Spokane, Washington; Tulsa, Oklahoma; and Beijing, China. Mr. Brant is licensed to practice in Oregon and Washington. His practice focuses on tax, tax controversy and transactions. Mr. Brant is a past Chair of the Oregon State Bar Taxation Section. He was the long-term Chair of the Oregon Tax Institute, and is currently a member of the Board of Directors of the Portland Tax Forum. Mr. Brant has served as an adjunct professor, teaching corporate taxation, at Northwestern School of Law, Lewis and Clark College. He is an Expert Contributor to Thomson Reuters Checkpoint Catalyst. Mr. Brant is a Fellow in the American College of Tax Counsel. He publishes articles on numerous income tax issues, including Taxation of S Corporations, Reasonable Compensation, Circular 230, Worker Classification, IRC § 1031 Exchanges, Choice of Entity, Entity Tax Classification, and State and Local Taxation. Mr. Brant is a frequent lecturer at local, regional and national tax and business conferences for CPAs and attorneys. He was the 2015 Recipient of the Oregon State Bar Tax Section Award of Merit.
