The Corporate Transparency Act (the “CTA”) imposes new requirements for certain companies (“Reporting Companies”) to disclose identifying information about the company’s beneficial owners to the Financial Crimes Enforcement Network (“FinCEN”) in an effort to combat illicit financial activities. For more information about the CTA and its requirements, please refer to our prior article.
On January 7, 2025, the United States District Court for the Eastern District of Texas, in Smith v. United States Department of the Treasury, issued an injunction which stayed the CTA’s reporting requirements. On February 18, 2025, the Smith injunction was stayed, effectively reinstating the CTA’s reporting requirements.
Because Reporting Companies will need time to comply with the CTA, FinCEN issued guidance on February 19, 2025, stating, “FinCEN is generally extending the [reporting] deadline 30 calendar days from February 19, 2025, for most companies.”
Thus, Reporting Companies are again required to comply with the CTA and report by March 21, 2025.
The CTA continues to be the subject of significant litigation and legislative proposals. FinCEN may provide additional guidance to Reporting Companies or may modify its current guidance. Additionally, a bill that has passed the House is waiting to be considered in the Senate, and if passed into law the reporting deadline will be extended to January 1, 2026, for some Reporting Companies. Tydings will continue to monitor developments as they occur.
What Does the Recent Decision Mean for Reporting Companies and Beneficial Owners?
- Reporting Companies are required to file initial, updated, or corrected reports with FinCEN by March 21, 2025.
- Beneficial owners are required to disclose identifying information to FinCEN on their Reporting Companies’ reports.
- Reporting Companies and their beneficial owners should act quickly to file reports by March 21, 2025.
Reporting Companies and their beneficial owners should consult with counsel to ensure their compliance with the Corporate Transparency Act. Please contact Zachary M.D. Jones, Barry Weiskopf, or any member of the Tydings Business, Corporate, and Tax practice group if you have questions or would like assistance with compliance.
This alert has been prepared by Tydings for informational purposes only and does not constitute legal advice.