On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit lifted a Texas District Court’s preliminary injunction that had temporarily paused enforcement of the Federal Corporate Transparency Act (CTA) nationwide in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.). Reporting companies now face renewed urgency to ensure their beneficial ownership reports are submitted to FinCEN’s online database by the revised deadlines to avoid steep penalties.
Revised Filing Deadlines Announced by FinCEN
In light of this late December court ruling, the Financial Crimes Enforcement Network (FinCEN) has published updated guidance on filing deadlines:
- Entities existing prior to January 1, 2024: Filing deadline extended to January 13, 2025.
- Entities with initial filing deadlines between December 3 and December 23, 2024: Filing deadline extended to January 13, 2025.
- Entities created or registered between December 3 and December 23, 2024: Filing deadline extended by 21 days from the initial deadline.
- Entities already granted disaster-related extensions: Deadline remains the later of the disaster extension or January 13, 2025.
- Entities formed between December 24, 2024, and December 31, 2024, are expected to report within 90 days of formation.
- Entities formed on or after January 1, 2025, must still report within 30 days of formation under FinCEN’s current regulations.
What This Means for Your Business
Although additional legal challenges to the CTA may be forthcoming, including additional review by the Fifth Circuit and potential review by the U.S. Supreme Court, the Fifth Circuit’s decision underscores the Department of Justice’s push to defend the CTA’s constitutionality and the Court’s emphasis on combating financial crime and protecting national security. Congress also recently declined to extend the reporting deadline to January 1, 2026, further reinforcing that reporting companies must be ready to comply with the CTA.
If your business is a reporting company subject to the CTA’s compliance obligations, now is the time to prepare to disclose information about your company’s beneficial owners, including their names, dates of birth, addresses, and identification numbers on a non-expired U.S. driver’s license or passport. Failure to report beneficial owners, unless an exemption applies, by the applicable filing deadline may result in penalties, including fines of up to $591 per day and potential jail time. Reporting companies must also update their filings within 30 days of any changes.
The countdown to comply with the CTA is back on. Evaluate your governance structure, establish protocols to collect necessary information, and determine how to maintain ongoing compliance.
Have Questions or Need Assistance?
Have questions or need assistance determining compliance? Contact KJK’s CTA task force at CTA@kjk.com. We provide a comprehensive CTA compliance program to assist your business with its reporting obligations.