By Terry Ann Donner RN, JD, CCM, CSA
Fellow freelancers may be wondering whatever happened to the requirement to report ownership information on their businesses to the United States Department of the Treasury Financial Crimes Enforcement Network (“FinCEN”). The saga of the Corporate Transparency Act (“CTA”) not only continues in the court system, but Congress has also weighed in.
On January 23, 2025, the United States Supreme Court did not decide whether the CTA was constitutional, but did lift the injunction blocking the enforcement of the CTA in Texas Top Cop Shop, Inc. v. Garland.
This meant that certain companies would once again have to report beneficial ownership information (“BOI”) to FinCEN to help law enforcement identify companies engaging in money laundering, tax evasion or other criminal activities.
However, FinCEN’s website on January 24, 2025 announced that, despite the United State Supreme Court’s decision in the Texas Top Cop Shop, there would be no liability for failing to report BOI because a national injunction on the enforcement of the reporting requirement was issued on January 7, 2025 by a federal judge in Texas in Smith v. U.S. Department of the Treasury.
What is Happening in the Courts Now?
The Texas Top Cop Shop returned to the Fifth Circuit court for a decision regarding the constitutionality of the CTA. Oral arguments are scheduled to occur on March 25, 2025.
The Department of Justice, on behalf of the Department of the Treasury, appealed the District Court’s order in Smith and has requested a stay of the injunction during the appeals process.
Three other District Court decisions have ongoing appeals filed in the Fourth, Ninth and Eleventh Circuit Courts.
FinCEN’s Current Position on a BOI Reporting Deadline?
The reporting deadline for BOI is currently on hold. However, FinCEN has indicated that if the stay in Smith is granted, the BOI reporting requirement will be instituted thirty (30) days from the date the stay is issued.
Legislative Activity
The House of Representatives unanimously passed H.R. 736 (the “Protect Small Business from Excessive Paperwork Act”), which would extend the BOI reporting deadline until January 1, 2026. The bill will now go to the Senate for a vote.
Certain Republicans in Congress introduced legislation to repeal the CTA. The Repealing Big Brother Overreach Act (H.R. 125 and S. 100), introduced January 15, 2025, has not received bipartisan support and remains in committee.
Summary of the Current Status of CTA
BOI reporting requirements are on hold due to the national injunction in Smith. A decision on the appeal of this injunction is expected soon. If the injunction is stayed, FinCEN intends to impose penalties for failure to report BOI thirty (30) days after the date of the stay.
The House has passed legislation to extend reporting of BOI until January 1, 2026. This bill now must be voted on by the Senate.
There is legislation in the committee review stage that supports appealing the CTA.
What Should You Do?
You could voluntarily report to avoid a last minute scramble should the injunction in Smith be lifted and FinCEN enforces a thirty (30) day reporting deadline. You could also wait to see if Congress passes legislation regarding the CTA.
It may be helpful to gather the BOI information that you may need to report in the event a short reporting deadline is imposed.
February 14, 2025
Donner Health Communications LLC