On February 5, 2025, the U.S. government filed a motion to appeal the nationwide stay issued in Smith v. United States Department of the Treasury. The stay, granted by a federal district court in Texas, is causing temporary suspension of the enforcement of the Corporate Transparency Act (CTA) reporting requirements. In fact, the Supreme Court ruling that happened just a couple of weeks ago would have resumed reporting, however, Smith v. United States Department of the Treasury was the ruling standing in the way.
What to Expect Next
While legal challenges to the CTA continue, recent actions by the government and the courts suggest that the CTA may be back sooner than you think. In fact, it is expected that significant movement will occur next week. The previous Supreme Court ruling and the government's appeal in Smith underscores the administration’s commitment to defending the CTA's constitutionality and implementation, and recent judicial momentum further supports this.
What Does This Mean for Your Business?
The government's appeal seeks to remove the stay, which would make the CTA’s reporting rule enforceable again if lifted. While reporting companies are not currently required to submit Beneficial Ownership Information (BOI) reports to the Financial Crimes Enforcement Network (FinCEN), they would be required to do so if the stay is lifted. FinCEN has indicated it will offer a 30-day extension to the reporting deadline from the date the stay is lifted.
If you have already filed your initial BOI Report, this information still applies to you. Since reporting is on hold, filing updated BOI Reports is not required either. Remember, when enforcement is no longer blocked, updates will be required to be reported within 30 days of the change. If the stay is lifted, the requirement to file updated reports for changes in beneficial ownership information would resume. Those who have filed an initial report should evaluate if any information has changed since they first filed, if so, be aware that an updated BOI report would need to be filed as soon as the stay is lifted (it is uncertain whether the 30 day extension will apply to updated BOI Reports).
Time to Start Collecting BOI Information
If you have delayed filing BOI due to the voluntary nature of the reporting requirements, now is the time to solidify a plan for filing. Even with the potential for a 30-day extension, professionals may not have the capacity to handle the added workload required to file these reports during tax season, which could cause significant issues for clients. Starting now will allow you to better prepare and avoid rushing through the process later.