Corporate Transparency Act Beneficial Owner Information Reporting Requirement Reinstated; Deadline Slightly Extended

Corporate Transparency Act Beneficial Owner Information Reporting Requirement Reinstated; Deadline Slightly Extended 

[Updated 12/24/24]

On December 23, 2024, the requirement to comply with the federal Corporate Transparency Act ("CTA") was reinstated, but FinCEN granted a brief extension of the CTA’s original reporting deadlines.  The nationwide preliminary injunction suspending the reporting deadline and enforcement of the CTA was lifted by Order of the United States Court of Appeals for the Fifth Circuit. This order negates the December 3rd injunction issued by the US District Court for the Eastern District of Texas.

The preliminary injunction was lifted  in response to the U.S. federal government’s emergency motion contesting the lower court’s issuance of the preliminary injunction. Specifically, the Fifth Circuit’s decision to lift the preliminary injunction is based primarily on the court’s finding that the federal government is likely to be successful in defending the CTA’s constitutionality, as the court reasons that the CTA likely falls under the authority granted to Congress by the Commerce Clause and that the last-minute injunction of the statute causes irreparable harm to the government, which would have been prevented from enforcing a law that was passed by the “people’s representatives.”

This means that, until further order of the court, the preliminary injunction granted by the lower court is suspended and therefore, the statute may be enforced. At least for now, this also means that, for all entities who are not otherwise exempt under the CTA’s regulations, an initial beneficial ownership information report (“BOIR” or “BOI Report”) must be submitted to FinCEN by the applicable deadline, and all BOI Reports must be timely updated as the reported information changes.

In recognition of the disruption caused by the now-lifted temporary injunction, FinCEN (a division of the Department of the Treasury) granted a slight extension of the previous deadline for entities to file their initial BOI Report, which for most entities was January 1, 2025. Now, with some exceptions based on when an entity was formed, most reporting companies have been granted an extension to January 13, 2025, to file their initial report. In addition, reporting companies must update their filed BOI Report within 30 days after previously reported information changes. If an entity believes it is exempt from the CTA’s reporting requirements, it should consult with its legal counsel.

We will be available to provide assistance and counsel to our clients throughout the coming days. There are still a number of efforts underway to modify or abolish the CTA’s beneficial ownership reporting requirement. We will continue to monitor pending litigation and congressional bills related to the CTA and its impact on community associations and provide further updates as warranted. The Community Associations Institute (CAI) is also monitoring these matters and periodically providing updates on the following site: https://www.caionline.org/advocacy/advocacy-priorities-overview/corporate-transparency-act/.  For now, however, covered entities need to be prepared to timely comply with the newly delayed deadline for filing their initial BOI Report.