In a recent blog post, we discussed a federal district court’s issuance of a nationwide injunction against the Corporate Transparency Act (“CTA”), temporarily halting the requirement for businesses to file “beneficial ownership information” (“BOI”) reports with the Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). In that post, we promised to keep you updated on the legal status of the CTA and its BOI reporting requirements. Well, we are here to tell you that the saga continues . . .
As of December 23, 2024, that nationwide injunction is no longer enforceable, and the BOI reporting requirements of the CTA have been reinstated. The Court of Appeals for the Fifth Circuit issued a temporary stay on the nationwide injunction. The Fifth Circuit found that the government made a strong showing that it is likely to succeed in proving that the CTA is constitutional. The court explained that Congress exercised its broad authority under the Commerce Clause to pass the CTA, aiming to regulate the anonymous ownership and operation of businesses that constitute an “economic class of activities” significantly affecting interstate commerce. Consequently, the court determined that the reporting requirement for such businesses is within the scope of the Commerce Clause.
The court further concluded that “a last-minute injunction of a statute proposed and passed by the people’s representatives inevitably causes irreparable harm.” Additionally, the court determined that the burden on businesses required to report is minimal. When weighed against the “public’s urgent interest in combatting financial crime and safeguarding national security,” the court found that a stay of the injunction was justified.
Following the Fifth Circuit’s ruling, the Department of the Treasury issued an alert on the FinCEN website acknowledging that reporting companies may require additional time to comply with the CTA due to the period when the preliminary injunction was in place. As a result, the reporting deadlines have been extended as follows:
- Reporting companies established or registered before January 1, 2024, now have until January 13, 2025, to submit their initial BOI reports to FinCEN. (Previously, these companies were required to report by January 1, 2025).
- Reporting companies formed or registered in the United States on or after September 4, 2024, and before December 3, 2024, have until January 13, 2025, to submit their initial BOI reports to FinCEN.
- Reporting companies formed or registered in the United States between December 3, 2024, and December 23, 2024, have an additional 21 days beyond their original filing deadline to submit their initial BOI reports to FinCEN.
- All reporting companies created or registered in the United States on or after January 1, 2025, have 30 days to file their initial BOI reports with FinCEN.
So, what does it all mean?
If your farm business is registered in Ohio, compliance with the CTA’s reporting requirements is once again mandatory. While farm businesses now have a slight extension to meet the BOI reporting requirements, it is probably best practice not to delay too long.
This situation is unfolding quickly. This case may still undergo further review by the Fifth Circuit or potentially reach the Supreme Court of the United States. Additionally, several other federal courts are currently evaluating challenges to the CTA. We will make every effort to keep you informed promptly as the situation develops.