The Corporate Transparency Act (CTA) and Beneficial Ownership Information (BOI) Reporting: Legal Developments and Deadlines

Introduction

In 2021, Congress passed the Corporate Transparency Act (“CTA”), requiring many small and mid-sized businesses to file reports disclosing information about their ownership. These reports, known as Beneficial Ownership Information (“BOI”) Reports, must be filed with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”).

The CTA aims to reveal beneficial owners to “disrupt financial anonymity,” which has historically facilitated corruption, money laundering, drug trafficking, and terrorism.

Who Is Required to File BOI Reports?

The CTA mandates that a “reporting company” must prepare and file a BOI Report. The term “reporting company” is broadly defined and includes:

• Corporations, limited liability companies (LLCs), and other entities created through filings with a secretary of state or similar office under state law.
• Entities formed under foreign laws but registered to do business in the United States.

Key Deadlines for BOI Reporting

The CTA’s requirements took effect on January 1, 2024. The reporting deadlines were as follows:

• For companies formed before January 1, 2024: The deadline to file was January 1, 2025.
• For companies formed between January 1, 2024, and January 1, 2025: The initial BOI report was due within 90 calendar days of receiving notice of the company’s creation or registration.
• For companies formed on or after January 1, 2025: The report must be filed within 30 calendar days of receiving notice of creation or registration.

Legal Challenges to the CTA

The Mazzant Order (Tex. Top Cop Shop, Inc. v. Garland)

On May 28, 2024, a lawsuit was filed against the U.S. government in Tex. Top Cop Shop, Inc. v. Garland, seeking an injunction against the CTA. On December 3, 2024, Judge Amos Mazzant of the Eastern District of Texas ruled that the CTA was unconstitutional and issued an order halting its enforcement.

The court found that:

“At its most rudimentary level, the CTA regulates companies that are registered to do business under a State’s laws and requires those companies to report their ownership, including detailed, personal information about their owners, to the Federal Government on pain of severe penalties. Though seemingly benign, this federal mandate marks a drastic two-fold departure from history.”

Reinstatement and Reversal by the Fifth Circuit

• On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit stayed the Mazzant Order, effectively reinstating the CTA’s requirements.
• On December 26, 2024, the Fifth Circuit vacated its own ruling, reinstating the Mazzant Order to preserve constitutional issues.
• The government then sought relief from the U.S. Supreme Court, which on January 23, 2025, overturned all prior orders and reinstated the CTA’s reporting requirements.

The Kernodle Order (Smith v. U.S. Dep’t of the Treasury)

On January 7, 2025, another case in the Eastern District of Texas (Smith v. U.S. Dep’t of the Treasury) resulted in Judge Kernodle issuing an order staying the enforcement of the CTA nationwide.

Judge Kernodle ruled that:

“The Corporate Transparency Act is unprecedented in its breadth and expands federal power beyond constitutional limits. It mandates the disclosure of personal information from millions of private entities while intruding on an area of traditional state concern.”

Current Status and FinCEN Guidance

Due to the Kernodle Order, FinCEN has issued an alert stating that:

• Reporting companies are not currently required to file BOI reports and will not be subject to liability if they fail to do so while the order remains in force.
• Companies are encouraged to voluntarily submit BOI reports.

Conclusion

The enforcement of the CTA remains in flux as legal challenges continue. We will keep you updated as new developments emerge. If you are a business owner, it is advisable to stay informed and consult with legal counsel regarding your compliance obligations.

Note: This article is for informational purposes only and does not constitute legal advice.

About the Author:

Danielle Dudai is an experienced attorney specializing in business litigation, business transactions, arbitration, and blockchain/cryptocurrency compliance. With over a decade of experience, she serves small and mid-sized businesses in Florida and Texas. Her expertise includes litigation strategy, acquisitions, SEC compliance, employee contracts, and more. Danielle has handled over 80 cases, including 50+ jury trials, and her background as a prosecutor strengthens her courtroom abilities.
Recognized as a Florida Rising Star and one of Broward County’s Top 40 Under 40, she also serves as a public arbitrator for FINRA. Danielle has received notable academic awards and is highly regarded for her strategic legal insight.