Author: Dean Smith (PhD, CFP, TEP, CPA, CA, RWM; Partner)
CTA back on again – for now – or is it??
On February 18, 2025, the U.S. District Court for the Eastern District of Texas stayed the preliminary relief it had previously granted in its January 5, 2025, order. Though the U.S. Supreme Court had, on January 23, 2025, reversed the U.S. Court of Appeals for the Fifth Circuit’s preliminary injunction involving Texas Top Cop Shop v. Garland, the court did not address the injunction in the Smith v. U.S. Department of Treasury case. As such, a nationwide injunction remained in place. Considering the Supreme Court ruling, the U.S. District Court for the Eastern District of Texas stayed its prior ruling.
Previously, FinCEN had announced that it would extend the reporting deadline by 30 days once the stay was lifted. Once the stay was lifted, FinCEN announced that the extended reporting deadline is now March 21, 2025.
On February 27th, 2025, however, FinCEN announced that it will not issue any fines or penalties or take any other enforcement actions against companies based on any failure to file or update their BOI reports by the current deadlines until a forthcoming interim final rule becomes effective.
FinCEN intends to issue an interim final rule no later than March 21, 2025, that extends BOI reporting deadlines, recognizing the need to provide new guidance and clarity as quickly as possible, while ensuring that BOI that is highly useful to important national security, intelligence, and law enforcement activities is reported.
FinCEN also intends to solicit public comment on potential revisions to existing BOI reporting requirements. FinCEN will consider those comments as part of a notice of proposed rulemaking anticipated to be issued later this year to minimize burden on small businesses while ensuring that BOI is highly useful to important national security, intelligence, and law enforcement activities, as well to determine what, if any, modifications to the deadlines referenced here should be considered.
Other things to keep in mind, the oral arguments are still scheduled to be heard on March 25, 2025, and Congress has been pushing FinCEN to extend the reporting deadline until January 1, 2026. H.R. 736, “Protect Small Businesses from Excessive Paperwork Act of 2025” passed the house on February 10, 2025, by a vote of 408 to zero. It was referred to the Senate on February 11, 2025, read twice and referred to the Committee on Banking, Housing and Urban Affairs.
My personal thoughts
This on again, off again approach is very unsettling for taxpayers. Given the various District Court opinions, it is highly likely that the question of the constitutionality of the Corporate Transparency Act will go to the U.S. Supreme Court. Why doesn’t FinCEN just wait and see what the Court decides? What is the immediate rush? In the meantime, working with Congress, they could address many of the issues already raised to try and streamline or simplify the process.
It would be good to give taxpayers a break until this issue has been decided once and for all and then issue a final clear set of guidance (should be it ruled constitutional) with extended deadlines that give all taxpayers sufficient time to respond and comply. Is it asking too much for some common sense to come into play? Enough with the legal gymnastics.
