Celebrating Over 75 Years of Serving Nevada’s Legal, Business, Government, and Civic Communities
Corporate Transparency Act: New Law and New Requirements
Effective January 1, 2024, a new filing requirement was imposed on many business entities, particularly smaller privately held companies, by a new federal law named the Corporate Transparency Act (CTA).
On March 21, 2025, FinCEN announced “Consistent with the U.S. Department of the Treasury’s March 2, 2025 announcement (see below), the Financial Crimes Enforcement Network is issuing an interim final rule that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information to FinCEN under the Corporate Transparency Act. Existing foreign companies that must report their beneficial ownership information have at least an additional 30 days from the date of publication of the interim final rule. These foreign entities, however, will not be required to report any U.S. persons as beneficial owners, and U.S. persons will not be required to report BOI with respect to any such entity for which they are a beneficial owner.”
On March 2, 2025, the Treasury Department announced suspension of the enforcement of the CTA against U.S. citizens and Domestic Reporting Companies. The Treasury Department states (here) that:
- “it will not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines”
- “it will not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect”
- “it will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only”
Please click here for a CTA FAQ prepared by McDonald Carano attorney Mike Whittaker.
COMPLIANCE UPDATE: On January 23, 2025, the U.S. Supreme Court stayed the injunction in Texas Top Cop Shop v. Garland that had blocked the enforcement of the CTA, thereby allowing the government to implement the CTA while the law’s merits are being debated in the U.S. Court of Appeals for the Fifth Circuit. The Fifth Circuit court plans oral arguments on April 1. On January 24, FinCEN posted a notice on its website stating that, despite the Supreme Court’s action in Texas Top Cop Shop, reporting companies are not required to file beneficial ownership information and are not subject to liability if they fail to file this information because a separate nationwide order issued by a different federal judge in Smith v. U.S. Department of the Treasury still remains in place. “However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
On February 5, the Department of Justice—on behalf of the Department of the Treasury—filed a notice of appeal of the district court’s order in Smith v. U.S. Department of the Treasury and, in parallel, sought to stay that order as the appeal proceeds. The notice on the FinCEN website states that “If the district court’s order is stayed, thereby allowing FinCEN’s Reporting Rule to come back into effect, FinCEN intends to extend the reporting deadline for all reporting companies 30 days from the date the stay is granted. Further, in keeping with Treasury’s commitment to reducing regulatory burden on businesses, FinCEN, during that 30-day period, will assess its options to modify further deadlines or reporting requirements for lower-risk entities, including many U.S. small businesses, while prioritizing reporting for those entities that pose the most significant national security risks.”
On February 17, Judge Jeremy Kernodle of the US District Court for the Eastern District of Texas issued a stay of the injunction against enforcement of the CTA he had previously issued in the case of Smith v. Treasury. Judge Kernodle indicated the stay is being issued in light of the Supreme Court’s order in McHenry v. Texas Top Cop Shop, Inc. The decision will allow the law to be enforced while the U.S. Department of Justice appeals his earlier ruling declaring the law unconstitutional.
On February 18, FinCEN announced on its website that, in light of Judge Kernodle’s February 17 decision in Smith v. Treasury, BOI reporting requirements “are once again back in effect. However … FinCEN is generally extending the deadline 30 calendar days from February 19, 2025, for most companies. [And] 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.” Please read the complete deadline announcement here.
On February 12, U.S. Senators Katie Britt (R-Ala.) and Tim Scott (R-S.C.) introduced the Protect Small Businesses from Excessive Paperwork Act of 2025. Companion legislation in the House of Representatives passed on February 10 by a vote of 408-0. The bill, if enacted into law, would delay the filing deadline for entities in existence on January 1, 2024 until January 1, 2026 but would not impact entities formed in 2024 or 2025.
On February 27, Today, FinCEN announced that it “will not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update beneficial ownership information (BOI) reports pursuant to the Corporate Transparency Act by the current deadlines. No fines or penalties will be issued, and no enforcement actions will be taken, until a forthcoming interim final rule becomes effective and the new relevant due dates in the interim final rule have passed. No later than March 21, 2025, FinCEN intends to issue an interim final rule that extends BOI reporting deadlines. FinCEN also intends to solicit public comment on potential revisions to existing BOI reporting requirements. FinCEN will consider those comments as part of a notice of proposed rulemaking anticipated to be issued later this year to minimize burden on small businesses … as well to determine what, if any, modifications to the deadlines referenced here should be considered.”
LITIGATION HISTORY: On December 3, 2024, in the case of Texas Top Cop Shop, Inc. v. Garland, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction temporarily pausing enforcement of the CTA and its BOI reporting rule, finding the CTA likely is unconstitutional. On December 5, 2024, the Department of Justice filed a notice of appeal to the Fifth Circuit Court of Appeals and filed emergency motions for a stay of the injunction pending appeal. On December 23, 2024, the Fifth Circuit ruled in favor of the DOJ and granted a stay of the nationwide injunction pending appeal, meaning the injunction is no longer in effect and FinCEN may enforce compliance. As provided below, FinCEN extended reporting deadlines in light of the December 23 ruling. The Fifth Circuit’s ruling is not a final determination of the CTA’s constitutionality; instead, it permits enforcement while the case proceeds on appeal. The Fifth Circuit’s ruling noted “the government has made a strong showing that it is likely to succeed on the merits in defending CTA’s constitutionality.”
On December 24, the plaintiffs in Texas Top Cop Shop filed a petition with the Fifth Circuit for rehearing en banc following the Fifth Circuit’s December 23 decision to stay the injunction and requested a ruling by January 6, 2025. In an order filed on December 26, the Fifth Circuit merits panel vacated the Fifth Circuit motions panel’s stay (issued December 23) of the District Court’s preliminary injunction which had barred enforcement, thus making the CTA unenforceable. The ruling further states “[t]he merits panel now has the appeal, which remains expedited, and a briefing schedule will issue forthwith.”
- The Fifth Circuit has issued an expedited briefing. Briefing will occur in February, and the court has scheduled oral argument on March 25, 2025, after which it will need time to issue an opinion.
- On December 27, FinCEN posted an Alert on its website stating “In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
In an emergency application docketed Dec. 31, 2024, the Justice Department asked the Supreme Court to stay the district court’s injunction blocking CTA enforcement, stating “Contrary to the district court’s decision, the Commerce Clause and Necessary and Proper Clause empower Congress to adopt the CTA’s reporting requirements.” Justice Alito, who handles emergency matters from the Fifth Circuit, asked the plaintiffs in Texas Top Cop Shop, Inc. to reply to the federal government’s petition by January 10, 2025. On January 23, 2025, the U.S. Supreme Court stayed the injunction that blocked enforcement of the CTA, which now allows the government to implement the CTA while the law’s merits are being debated in the U.S. Court of Appeals for the Fifth Circuit. The Fifth Circuit court plans oral arguments on March 25. On January 24, 2025, FinCEN posted a notice on its website stating “As a separate nationwide order issued by a different federal judge in Smith v. U.S. Department of the Treasury still remains in place, reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
ADDITIONAL LITIGATION: On January 2, 2025, FinCEN posted a notice on its website stating that “Texas Top Cop Shop, Inc. is only one of several cases that have challenged the Corporate Transparency Act (CTA) pending before courts around the country.” FinCEN’s summary of additional litigation is available as a PDF here and on FinCEN’s website here.
CTA Overview
The CTA was enacted as part of the Anti-Money Laundering Act of 2020 and applies to entities deemed to be “Reporting Companies.” The goal of the CTA is to address concerns about illicit activity through the use of obscure U.S. business entities—including money laundering, the financing of terrorism, tax fraud, human and drug trafficking, counterfeiting, piracy, securities fraud, financial fraud, and acts of foreign corruption—by requiring Reporting Companies to provide governmental authorities with information about their beneficial owners and controlling persons. The focus of the CTA is not on larger companies but rather on smaller and medium-sized legal entities, including shell companies, that generally either are not subject to supervision by other regulatory agencies (e.g., entities regulated by the Securities and Exchange Commission and Commodity Futures Trading Commission, or organizations that are tax-exempt under the Internal Revenue Code), or employ fewer than twenty-one full-time employees and generate less than $5 million in annual U.S. revenue.
About McDonald Carano
In 2024, McDonald Carano celebrated its 75ᵗʰ Anniversary of serving Nevada’s legal, business, government, and civic communities. More than 60 lawyers and government affairs professionals serve Nevada, national, and international clients from our offices in Reno, Las Vegas, and Carson City. McDonald Carano provides transactional, litigation, regulatory, and government affairs services to startups, corporations, private companies, trade associations, nonprofits, public entities, high-net-worth individuals, and family offices throughout Nevada. We are deeply committed to supporting local communities by volunteering our time, resources, and services, including pro bono legal services, to nonprofit organizations, charitable foundations, and public service entities. We are proud to be your Nevada law firm since 1949.
Media Contact
Mark Buckovich
[email protected]
702.257.4559
You have chosen to send an email to McDonald Carano. The sending or receipt of this email and the information in it does not in itself create an attorney-client relationship. If you are not already a client, you should not provide us with information that you wish to have treated as privileged or confidential without first speaking to one of our lawyers. If you provide information before we confirm that you are a client and that we are willing and able to represent you, we may not be required to treat that information as privileged, confidential, or protected information, and we may be able to represent a party adverse to you.
I have read this and want to send an email.