Corporate Transparency Act

The Corporate Transparency Act (CTA) was passed by the U.S. Congress on January 1, 2021, as part of the Anti-Money Laundering Act of 2020. The stated purpose of the CTA is to improve corporate transparency and curb illicit activities and financial crimes, including the use of shell and front companies to obfuscate ownership and launder money. Specifically, per its terms, the CTA exists “to help prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activities by making it more difficult for bad actors to conceal their financial activities through entities with opaque ownership structures” while also “providing essential information to law enforcement and other agencies to help prevent corrupt actions, terrorists, and proliferators from hiding money and property in the United States.”

The CTA represents a major change for businesses in the United States by requiring the disclosure of beneficial owners of all domestic and U.S.-registered foreign reporting companies, unless an exemption applies. The CTA and its implementing reporting and other rules apply to: (i) “domestic reporting companies,” such as corporations, limited liability companies (LLCs), and others that are created by filing documents with a secretary of state or similar office under the laws of a state or Indian tribe; and (ii) “foreign reporting companies” that are formed under the laws of a foreign country and are registered to do business in the U.S. by the filing of a document with a secretary of state or similar office under the laws of a state or Indian tribe, subject in each case to any exemptions under the CTA and the CTA Rules.

For an overview of the CTA, including details on which U.S. and foreign companies are subject to the CTA reporting requirements, exemptions from the requirements, beneficial ownership and other information required to be reported, filing deadlines, and penalties for non-compliance, please see “The Corporate Transparency Act (CTA): An Overview” under the Resources tab.

Since its passage, multiple companies and groups have challenged whether the CTA and the CTA Rules are enforceable.

Summary of Most Recent Developments as of February 20, 2025:

• On January 23, 2025, the United States Supreme Court (SCOTUS) reversed the U.S. district court’s preliminary injunction staying the Corporate Transparency Act (CTA) and the implementing Reporting Rule in Texas Top Cop Shop v McHenry (f/k/a, Texas Top Cop Shop v Garland), Case No. 4:24-cv-00478 (E.D. Tex. 2024). A separate nationwide stay of the CTA Reporting Rule issued on January 7, 2025 by another Texas district court in Smith v U.S. Department of Treasury, Case No. 6:24-cv-00336 (E.D. Tex. Jan 7, 2025) was not affected by the SCOTUS order in Texas Top Cop Shop and remained in effect.
• On February 18, 2025, the Smith district court entered its order staying the preliminary relief granted in its January 7, 2025 order, including the nationwide stay of the CTA Reporting Rule, pending disposition of the Smith appeal to the Fifth Circuit.
• On February 19, 2025, the Financial Crimes Enforcement Network (FinCEN) published an updated alert stating that, in view of the Smith district court’s decision, “beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) are once again back in effect.” FinCEN extended the deadline for most reporting companies filing initial, updated and corrected BOI reports to March 21, 2025 (30 calendar days from February 19, 2025).  FinCEN also stated that “during this 30-day period, FinCEN will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks” and that “FinCEN also 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.”  At the same time, FinCEN also updated two other alerts with respect to Texas Top Cop Shop and National Small Business United v Yellen.

The updated deadlines, as set forth in the FinCEN updated alert, are as follows:

• For the “vast majority” of reporting companies, the new deadline to file an initial, updated, and/or corrected BOI report is March 21, 2025. FinCEN also stated that it will provide an update before that deadline of any further deadline modifications, recognizing that more time may be needed to meet BOI reporting obligations.
• For reporting companies that were previously given a reporting deadline later than the March 21, 2025, the applicable deadline is that later deadline. FinCEN included as an 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.”
• FinCEN also noted that the plaintiffs in National Small Business United v. Yellen are not currently required to report their beneficial ownership information to FinCEN. See FinCEN alert “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)”.

For additional background, please see our alerts linked under “RESOURCES” on the left side of this page describing the Texas Top Cop Shop district court’s December 3, 2024 nationwide stay of the CTA Reporting Rule, the Fifth Circuit decisions lifting and then reinstating the Texas Top Cop Shop stay, the SCOTUS January 23, 2025 order lifting the Texas Top Cop Shop stay, the Smith district court’s January 7, 2025 nationwide stay of the CTA reporting Rule and its February 18, 2025 order lifting that stay, and the FinCEN February 19, 2025 alert announcing that the CTA reporting requirements are again in effect and setting new reporting deadlines. For additional information on current FinCEN alerts, see www.fincen.gov/boi.

Miller Canfield attorneys can provide compliance counseling and legal advice to clients impacted by the CTA.