The Corporate Transparency Act (“CTA”) is back in effect. After months of uncertainty, the U.S. District Court for the East District of Texas has reinstated the CTA’s beneficial ownership reporting requirements. The Financial Crimes Enforcement Network (“FinCEN”) has set a new reporting deadline of March 21, 2025. However, despite this clarity on timing, significant uncertainty remains about the CTA’s long-term enforceability and status.
History of the CTA
The CTA, enacted in 2021 to combat money laundering, tax evasion, and other illicit financial activities, requires certain U.S. businesses—known as “reporting companies”—to disclose information about their beneficial owners to FinCEN. Initially effective January 1, 2024, it faced immediate legal challenges. In December 2024, a federal district court in Texas issued a nationwide injunction, halting enforcement, as we previously covered.
The decision was appealed to the U.S. Court of Appeals for the Fifth Circuit, which briefly reinstated the CTA on December 23, 2024, only to reverse itself days later. The 5th Circuit’s decision was ultimately appealed to the U.S. Supreme Court, which, on January 23, 2025, lifted the injunction. However, a separate injunction from another Texas federal court kept the CTA on hold until February 17, 2025, when the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex.) granted the government’s motion to stay the nationwide injunction of the CTA. This latest development has prompted FinCEN to issue a 30-day filing window for a new deadline of March 21, 2025.
Who Must Comply—and What’s at Stake?
As we outlined previously, the CTA applies to many entities unless they qualify for one of the CTA’s 23 exemptions (e.g., publicly traded companies, large operating entities with over 20 employees and $5 million in revenue, or certain regulated entities). For those subject to the law, reporting companies must submit BOI reports identifying individuals who own or control at least 25% of the entity or exercise “substantial control” over it.
Importantly, non-compliance carries steep penalties. Failure to file a complete and accurate BOI report can result in civil penalties of up to $500 per day, with no cap, and criminal penalties including fines up to $10,000 and imprisonment for up to two years. Senior officers may also face personal liability for an entity’s failure to comply.
Continued Uncertainty
While the March 21 deadline provides temporary clarity, the CTA’s future remains uncertain. Ongoing litigation, including appeals in multiple federal courts, could still change the CTA’s future.
Next Steps for Businesses
To navigate this evolving landscape, reporting companies should:
- Determine Applicability – Confirm whether your entity is a “reporting company” and if any exemptions apply.
- Identify Beneficial Owners – Assess ownership and control structures to pinpoint individuals requiring disclosure.
- File with FinCEN – Submit the BOI report through FinCEN’s secure online portal by the March 21, 2025, deadline.
- Monitor Updates – Stay informed about legal challenges and regulatory guidance that could impact your obligations.
How Frier Levitt Can help
All existing entities, in conjunction with their accounting professionals, should ensure they are complying with the CTA. Frier Levitt can assist entities (1) determine whether or not they fit into one or more exemptions, (2) determine who constitutes a Beneficial Owner; and (3) assist in filing. Contact us for assistance.
