UPDATE (02.24.25): FinCEN has implemented a status update requiring non-exempt Reporting Companies to file the Beneficial Ownership Information Report (BOIR) with a March 21, 2025 deadline. This change is also reflected in this article’s “Now What” section. 

The Corporate Transparency Act (the Act) is now working its way through the Federal appeals process, creating further confusion for businesses required to comply with the Act. This article provides a brief overview of the Act and its intersection with the Federal court system.

Overview of the Corporate Transparency Act

The Act became effective on January 1, 2024. It requires all non-exempt corporations, limited liability companies, and partnerships created or registered to do business in the United States (“Reporting Companies”) to file a Beneficial Ownership Information Report (“BOIR”) with the Financial Crime Enforcement Network (“FinCEN”). The Act imposes stiff penalties on Reporting Companies who fail to comply.

A list of exempt organizations can be found in Chapter 1 of the FinCEN’s Small Entity Compliance Guide using this link:

www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide.v1.1-FINAL.pdf.

Reporting Companies are required to submit to FinCEN: (1) basic company information (e.g., business name, address, state of formation, and SSN-ITIN or EIN); and (2) information for each “Beneficial Owner” [1] (e.g., full legal name, date of birth, home address, and a passport number, driver’s license number, or other form of identification, including an image of the ID). The business may also need to disclose information about the “Company Applicant” [2] (similar to that required for Beneficial Owners).

To avoid disclosing personal information and having to provide the same information repeatedly, individuals may obtain their own FinCEN IDs before a Reporting Company files its BOIR. The FinCEN ID number is then used in place of an individual’s personal information. To obtain a FinCEN ID, an individual needs to set up a login.gov account at https://login.gov/create-an-account/ and then access the FinCEN ID application at https://fincenid.fincen.gov.

Reporting Companies were originally required to file BOIRs based on the dates they were formed: (1) those formed prior to January 1, 2024 were required to comply with the Act by January 1, 2025; (2) those formed between January 1 and December 31, 2024 were required to comply with the Act within 90 days after registering the business with a state and it becoming effective; and (3) those formed after December 31, 2024 were required to comply with the Act within 30 days after registering the business with a state and it becoming effective. As further discussed below, the deadlines were stayed, then the stay was lifted and the deadlines extended, then temporarily stayed again. As of the writing of this article, Reporting Companies may voluntarily comply with the Act or watch and wait to see what happens next as far as reinstatement of the deadlines.

It should also be noted that if there is any change to the information previously provided on a BOIR, an updated BOIR must be filed no later than 30 days after the date on which the change occurred.

Reporting Companies file their BOIRs electronically using FinCEN’s online, secure filing system at: https://boiefiling.fincen.gov. BOIRs cannot be mailed or faxed to FinCEN. There is no filing fee.

FEDERAL COURT CASES AND APPEALS

The Act has been the subject of significant scrutiny. As a result, several Reporting Companies challenged the Act as unconstitutional in Federal district courts across the country. In early December 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction staying enforcement of the Act while the court heard the case of Texas Top Cop Shop, Inc. v. Garland (Texas Top Cop Shop). The government appealed the ruling to the Fifth Circuit.

In late December 2024, the Fifth Circuit initially lifted the injunction, thereby requiring Reporting Companies to comply with the Act’s reporting deadlines. FinCEN then granted Reporting Companies extensions to meet the BOIR deadlines. A few days later, however, a merits panel of the Fifth Circuit then reinstated the nationwide injunction. This meant that Reporting Companies temporarily did not need to comply with the extended BOIR filing deadlines in reliance on the Fifth Circuit’s ruling in Texas Top Cop Shop. The government then asked the U.S. Supreme Court to determine whether the nationwide injunction is appropriate.

While the Texas Top Cop Shop injunction was pending resolution by the Supreme Court, another federal court judge in Texas issued a separate nationwide injunction in the case of Smith v. U.S. Department of the Treasury (Smith). In addition, members of Congress introduced the Repealing Big Brother Overreach Act in an effort to repeal the Act.

On January 23, 2025, the Supreme Court lifted the nationwide injunction imposed by the Texas Top Cop Shop case. However, because of the injunction in the Smith case, which, as of the writing of this article, has not yet been appealed to the Fifth Circuit, Reporting Companies are temporarily free from having to file BOIRs again.

UPDATE: On Tuesday, February 18, 2025, a decision was issued by the U.S. District Court for 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.) that reinstates the mandates BOIR filing for non-exempt Reporting Companies. 

NOW WHAT?

Many businesses have already complied with the Act and FinCEN through voluntary submissions of this report over the last several months. As of Wednesday, February 19, 2025, non-exempt Reporting Companies are mandated to file a BOIR by the new deadline of Tuesday, March 21, 2025. 

If you have questions about or need assistance determining whether your business is required to comply with the Act or would like assistance filing a BOIR, our Corporate Group can help. If you have questions about the Federal Appellate process or need assistance with an appeal, our Appeals Group is here to assist you.

DEFINITIONS

[1] A “Beneficial Owner” is an individual who owns or controls at least twenty-five percent (25%) of the ownership interests of a Reporting Company OR exercises substantial control over a Reporting Company. Examples of an individual who might be a beneficial owner through substantial control include: (a) a senior officer of a corporation or a manager of an LLC; (b) an individual who has the authority to appoint or remove certain officers or directors; (c) an individual who is an important decision-maker; (d) a trustee, trustor or beneficiary of a Trust; or (e) an individual who has any other form of substantial control.

[2] A “Company Applicant” is the person who files or is primarily responsible for directing or controlling the filing of a registration document with a Secretary of State that creates a Reporting Company.