CTA update: Reporting Rule reinstated; FinCEN imposes March 21 reporting deadline for most reporting companies

On February 17, 2025, the US District Court for the Eastern District of Texas stayed its previous order suspending enforcement of the Corporate Transparency Act (CTA)’s Reporting Rule in Smith v. US Dept. of the Treasury, 6:24-cv-336-JDK (E.D. Tex.). Under the Reporting Rule, certain entities (reporting companies) must report beneficial ownership information (BOI) to the US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). 

In January, the court in Smith stayed the effective date of the Reporting Rule, and the government appealed. The court’s February 17 order lifting that relief opens the door for the government to reinstate the Reporting Rule deadlines while the US Court of Appeals for the Fifth Circuit reviews the case on appeal.

On February 18, 2025, FinCEN issued a notice (2-18 Notice) via its website that BOI reporting requirements under the CTA are once again in effect, citing the recent decision in Smith. The 2-18 Notice provided updated deadlines as follows:

• For the vast majority of reporting companies – eg, reporting companies created before January 1, 2024 – the new deadline to file an initial, updated, and/or corrected BOI report is March 21, 2025.
  
  
• Reporting companies that were previously given a reporting deadline later than March 21, 2025 must file their initial BOI report by that later deadline. This includes companies that were created after January 1, 2025 and those that qualified for disaster relief and received filing extensions until April 2025. 
  
  
• Companies who are plaintiffs in National Small Business United v. Yellen, No. 5:22-cv-1448 (N.D. Ala.) – identified as Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association as of March 1, 2024 – are not currently required to report their BOI to FinCEN. (See our prior alert on this case.) 

Notably, FinCEN stated that it will “assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks.” FinCEN further stated that it “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.”

Background and recent developments regarding the CTA

Signed into law by former President Joe Biden in 2021, the CTA requires non-exempt[1] companies (reporting companies) to report their BOI to FinCEN, subject to fines and penalties. President Donald Trump vetoed the CTA near the end of his first term, but his veto was overridden by Congress as the CTA was included in the National Defense Authorization Act. In the CTA as enacted, non-exempt companies created or registered in any US state prior to January 1, 2024 were to report their BOI to FinCEN by January 1, 2025, subject to potential fines and/or penalties. (For more detailed information about the CTA’s provisions, see our prior alert or contact the CTA working group or your relationship partner.)

Several plaintiffs – mostly private businesses or organizations representing their interests – have filed lawsuits in various courts arguing that the CTA is unconstitutional. In National Small Business United v. Yellen, the US District Court for the Northern District of Alabama ruled that the CTA is unconstitutional and granted an injunction barring the government from enforcing the CTA against the plaintiffs in that case. In two cases in the US District Court for the Eastern District of Texas – Smith v. US Dept. of the Treasury and Texas Top Cop Shop, Inc. v. McHenry – judges issued nationwide temporary injunctions barring or suspending the government’s enforcement of the CTA. The government appealed the rulings and sought stays during the pendency of those appeals, resulting in a long and complicated procedural history. During this period, other district courts have upheld the constitutionality of the CTA.

A timeline of recent litigation, legislative, and regulatory developments involving the CTA is provided below.

• February 18, 2025: FinCEN issues the 2-18 Notice described above, making March 21, 2025 the BOI reporting deadline for most companies, stating it will assess options to further modify deadlines and reduce burdens on lower-risk entities while prioritizing reporting for entities with the most significant national security risks. 
  
  
• February 17, 2025: In Smith v. US Dept. of the Treasury, 6:24-cv-336-JDK (E.D. Tex.), a judge of the E.D. Texas stays its January 7, 2025 order granting preliminary relief pending the disposition of the appeal. The court’s January 7, 2025 order enjoined the government from enforcing the CTA against the plaintiffs in that case and suspended the application of the CTA’s Reporting Rule nationwide. 
  
  
• February 14, 2025: In Boyle v. Bessent, 2:24-cv-00081 (D. Me.), a judge in the US District Court for the District of Maine grants a motion for summary judgment for the government (and denies the dueling motion for summary judgment from the plaintiff), finding that “Congress asserted a rational basis for concluding the existence of corporate entities has a substantial effect on interstate commerce,” therefore determining that the CTA is constitutional under the Commerce Clause. The court notes that the CTA deadlines were stayed (at the time) due to the injunction ordered by the Smith court. 
  
  
• February 10, 2025: The US House of Representatives votes 408–0 to pass H.R. 736, which would provide an extension until January 1, 2026 for reporting companies formed prior to January 1, 2024 to file beneficial ownership reporting information with FinCEN. This bill currently awaits review by the US Senate.
  
  
• February 5, 2025: The government appeals the January 7, 2025 order granting preliminary relief in Smith v. US Dept. of the Treasury, No. (E.D. Tex.), and moves to stay the preliminary relief pending appeal. This marks the first time under the new Trump Administration that the US Department of Justice (DOJ) took action to defend the CTA in litigation. 
  
  
• January 24, 2025: FinCEN announces on its website that reporting companies are not currently required to file BOI with FinCEN following the Supreme Court’s order in Texas Top Cop Shop, Inc.
  
  
• January 23, 2025: In McHenry v. Texas Top Cop Shop, Inc., No. 24A653 (U.S. Jan. 23, 2025), the Supreme Court grants a stay of the nationwide injunction against the CTA that had been issued in Texas Top Cop Shop, Inc. v. Garland, 4:24-cv-478 (E.D. Tex.) on December 5, 2024. 
  
  
• September 27, 2024: In National Small Business United v. Yellen, No. 24-10736 (11th Cir.), the US Court of Appeals for the Eleventh Circuit hears arguments on the government’s appeal of the lower court’s ruling that the CTA is unconstitutional. Because it was the first of the federal appellate courts to hear oral argument, the Eleventh Circuit may be the first to opine on the constitutionality of the CTA.

Activity in Congress

Congress may be concerned with ensuring companies have adequate time to comply with the Reporting Rule. As noted in the timeline above, on February 10, 2025, the US House of Representatives unanimously passed a measure to delay the reporting deadline until January 1, 2026 for reporting companies formed or registered before January 1, 2024. Note, however, that there is no guarantee that this measure will be taken up by the US Senate and enacted within the next 30 days, if at all. Accordingly, reporting companies are encouraged to prepare to comply with the March 21, 2025 reporting deadline or the other applicable deadline set forth in the 2-18 Notice.

Separately, on January 15, 2025, a group of Republican senators reintroduced the Repealing Big Brother Overreach Act, which was introduced during the last congressional term with the stated intent of repealing the CTA and protecting small business owners. A group of Republican members of the House have introduced parallel legislation. It remains to be seen whether these repeal efforts will draw enough support to become law, however.

Next steps for reporting companies

Whether any modifications to the CTA will be made by FinCEN, or whether Congress will repeal the CTA or delay enforcement for entities created prior to January 1, 2024, remains to be seen. In the meantime, reporting companies are encouraged to prepare their BOI reports for filing in advance of the March 21, 2025 deadline (or a later deadline, where applicable). Reporting companies should remain flexible, however, as litigation is ongoing, proposed legislation is in progress, and FinCEN is considering potential modifications to reporting deadlines.

DLA Piper is here to help

DLA Piper’s CTA working group will continue to closely monitor all updates relating to the CTA.

For additional guidance regarding the CTA, the ongoing litigation and the status of the CTA, or related state requirements, please contact your DLA Piper relationship partner or any of the authors.

^{[1] The CTA provides 23 exemptions, which generally apply to already highly regulated businesses. There are also exemptions for large operating companies, pooled investment vehicles, subsidiaries of certain exempt entities, and inactive entities.}