In an important update, the judge in the Smith v. United States Department of the Treasury case has lifted the order that had temporarily stopped the Corporate Transparency Act (CTA) from being enforced. This February 18th ruling comes after the Supreme Court lifted a similar nationwide hold in the Texas Top Cop Shop, Inc. v. Garland case on January 25, 2025. This means the government can now move forward with enforcing the CTA’s reporting requirements, requiring the filing of Beneficial Ownership Information Reports (BOIR). Just a day after reporting resumed, FinCEN issued a 30-day extension to the filing deadline, pushing it out to March 21st, 2025.
What’s Next?
Despite these recent developments, the CTA still faces ongoing challenges. Along with the granted extension, FinCEN acknowledged that during this period "it will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks. FinCEN intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses." This indicates that the reach of the reporting rule may shrink and/or deadlines may change.
There is also current proposed legislation that just passed the House of Representatives that could extend the deadline until Jan 1, 2026, though the wording is very nebulous, and experts are still sorting out the implications while the Senate and Executive branches contemplate signing.
Oral arguments for Texas Top Cop Shop, Inc. v. Garland are scheduled for April 1, 2025, and there is a possibility that the Smith case could be consolidated with it, which may lead to a rescheduling of the arguments. With the March 21st extension, the due date for reports would elapse before any hearings mentioned above.
What Does This Mean for Reporting Companies?
For reporting companies that have already filed their initial Beneficial Ownership Information (BOI) report and have had no changes that require an updated or corrected report, the main takeaway is that you need to stay vigilant. While no immediate filing is required, keep an eye on any changes in your company’s beneficial owners, as these would trigger the need to file updated BOI reports within 30 days of that change. Essentially, reporting companies should stay prepared to update if necessary. If there are changes to your previously filed report, you should file updated reports as soon as possible and by March 21st. The extension 30-day extension applies to initial, updated, and corrected reports.
For reporting companies that have not yet filed, with deadlines falling in mid-March, this could create scheduling challenges for CPAs and other professionals who may not be able to take on additional work at that time due to tax season obligations. If you still need to report, start gathering the required information and provide it to your CPA or other professionals who can assist you in filing as soon as possible. With the CTA now enforceable, those who fail to report by March 21st could face penalties, with fines adding up to $606 a day (while the CTA was on hold, the noncompliance penalties were still affected by the annual inflation adjustment issued by FinCEN this January).
The recent court decisions, coupled with the current administration’s commitment to defend the CTA, strongly suggest that the CTA is here to stay and it is important to establish a plan for reporting.