Courtesy of the National Agricultural Law Center:
The Corporate Transparency Act (CTA) is a federal law aimed at combating financial crimes like money laundering and tax evasion. Under the CTA, most corporations, limited liability companies (LLCs), and similar entities are required to disclose their “beneficial owners”—individuals who own or control at least 25% of the business or exercise significant decision-making authority.
On January 1, 2024, the CTA’s rules went into effect. Entities created before that date were given until January 1, 2025 to comply, while companies formed during 2024 were given 90 days to report the beneficial ownership information. Numerous court actions were filed challenging the new requirement. The rulings since that time have gone back and forth, with a series of injunctions from some courts prohibiting the enforcement of the law while other courts allowing it. As of today (February 19, 2025), the CTA is again enforceable, after a nationwide enforcement stay was lifted by a federal district judge in Texas. A new deadline of March 21st is in effect for the majority of reporting companies.
New Deadlines
As of February 19th, FinCEN has identified new filing deadlines for reporting companies. They are as follows:
- “For the vast majority of reporting companies, the new deadline to file an initial, updated, and/or corrected BOI report is now March 21, 2025. FinCEN will provide an update before then of any further modification of this deadline, recognizing that reporting companies may need additional time to comply with their BOI reporting obligations once this update is provided.
- Reporting companies that were previously given a reporting deadline later than the March 21, 2025 deadline must file their initial BOI report by that later deadline. For example, if a company’s reporting deadline is in April 2025 because it qualifies for certain disaster relief extensions, it should follow the April deadline, not the March deadline.
- As indicated in the alert titled “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)”, Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv01448 (N.D. Ala.)—namely, Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024)—are not currently required to report their beneficial ownership information to FinCEN at this time.”
During the extended reporting period, FinCEN has committed to assessing its options to “further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks.”
Reporting Requirements
To comply with the CTA, reporting entities will need to:
- Identify Beneficial Owners: Determine who qualifies as a beneficial owner within your company. Consider factors like ownership percentage and decision-making power.
- Collect Required Information: Gather key details about each beneficial owner, including their full legal name, date of birth, residential address, and an identification number (e.g., from a passport or driver’s license), as well as a scan or picture of that identifying document.
- Submit Information to FinCEN: File the information securely with the Financial Crimes Enforcement Network (FinCEN) through its online reporting system. Detailed instructions are available on the FinCEN website.
Noncompliance carries significant consequences, including fines of up to $10,000 and/or imprisonment for up to 2 years. It is important to note that CTA requirements are separate from and in addition to any corporate paperwork that is filed with a state agency. It is an additional, and new, federal requirement.
Entities also have an ongoing requirement to update the report if information changes. If you have questions about the process, try reaching out to a legal or financial professional. Information on finding an attorney in your area is available here. Further, the FinCEN website provides additional resources and information to clarify requirements and streamline reporting.
What’s Next?
There is movement in Congress that may affect the reporting deadline. On February 10, the House of Representatives unanimously passed H.R. 736, which would modify the CTA by extending the filing deadline until January 1, 2026. That proposal has now moved to the Senate for consideration. A companion bill, S. 505, is also being considered in the Senate. Both the House and Senate versions would postpone the deadline, but leave the reporting requirements intact.
Other legislation, introduced together as H.R. 125 and S. 100, the “Repealing Big Brother Overreach Act,” would repeal the CTA entirely. They are under committee consideration in their respective chambers.
Finally, FinCEN has stated that it “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.”
Changes could be made based on further developments in this court case (or others), changes in the regulations or guidance or even further Congressional action. Because of that, it is important to stay aware of future developments.
For more information on the CTA and its requirements, the National Agricultural Law Center has a recorded webinar and factsheet available. Additionally, the Center for Agricultural Law and Taxation has followed the issue closely, and has resources, including a brief update on pending court challenges, available here.
If you have questions, please contact the author at (479) 387-2331 or erumley@uark.edu.
NAA Editor Note: For Ms. Rumley’s complete article that includes a description of the court challenges and outcomes click on: UPDATED Feb 19, 2025…..Corporate Transparency Act Requirements Reinstated: New Filing Deadlines.