We generally enjoy movies or television shows which feature many plot twists. However, when it comes to laws, we want more certainty. We want to know what the law is and not have to respond to frequent changes in the law.

Unfortunately, recently, such has not been the case with the law under the Corporate Transparency Act (“CTA”) that certain entities (“reporting companies”) are required to file a “Beneficial Ownership Information Report” (“BOIR”) with the United States Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). This article discusses the continuing saga of “BOIR/FinCEN” reporting.

By way of background, enacted by Congress in 2021, the CTA authorized FinCEN to create the BOIR requirement. With this authority, FinCEN issued a final rule on September 30, 2022, which it amended on November 29, 2023, concerning the BOIR requirement of the CTA. As administered by FinCEN, the BOIR requirement of the CTA became effective January 1, 2024.

Depending on when the reporting company was formed (for U.S.-formed reporting companies) or registered to do business in the United States (for foreign-formed reporting companies), there were three different applicable dates by which the reporting company had to comply with the BOIR requirement of the CTA, as follows:

• If the reporting company was formed or registered to do business in the United States on or before December 31, 2023, there had to be compliance with the BOIR requirement of the CTA by January 1, 2025. Thus, “December 31, 2023 existing” reporting companies generally were required to comply with the BOIR requirement of the CTA by January 1, 2025;
• If the reporting company was formed or registered to do business in the United States between January 1, 2024 and December 31, 2024, there had to be compliance with the BOIR requirement of the CTA within 90 calendar days after receiving actual or public notice of such formation or registration. Thus, for example, if a “Delaware limited liability company” reporting company was formed on February 1, 2024, it was required to comply with the BOIR requirement of the CTA before April 30, 2024; or
• If the reporting company was formed or registered to do business in the United States on or after January 1, 2025, there had to be compliance with the BOIR requirement of the CTA within 30 calendar days after receiving actual or public notice of such formation or registration.

It was reported in November, 2024 that over 6.5 million filings already had been made with FinCEN to comply with the BOIR requirement of the CTA. It was expected that a significant amount of additional such filings would be made in December, 2024, in particular, to comply with the “January 1, 2025” deadline for “December 31, 2023 existing” reporting companies.

However, everything changed on December 3, 2024. On that date, in the case of Texas Top Cop Shop, Inc. v. Garland, No. 4:24 CV-478, 2024 WL 5049220 (E.D. Tex. 2024), the United States District Court for the Eastern District of Texas issued a nationwide preliminary injunction that enjoined enforcement of the BOIR requirement of the CTA. As a result, as of December 3, 2024, the general advice was that reporting companies that had not yet made filings with FinCEN to comply with the BOIR requirement of the CTA should hold off on doing so.

The government then appealed the “December 3” Texas Top Cop Shop decision, and on December 23, 2024, the United States Court of Appeals for the Fifth Circuit, in an “Unpublished Order” in the Texas Top Cop Shop case (Texas Top Cop Shop, Inc. v. Garland, No. 24-40792, 2024 WL 5203138 (5th Cir. 2024)), granted a temporary stay of the District Court’s injunction pending appeal. In response to this Fifth Circuit ruling, FinCEN issued an “Alert”, stating that reporting companies now were once again required to comply with the BOIR requirement of the CTA, but granting additional time for “December 31, 2023 existing” reporting companies to so comply until January 13, 2025 (an extension from the previously applicable “January 1, 2025” deadline for these reporting companies). As a result, as of December 23, 2024, the general advice was that reporting companies that had not yet made filings with FinCEN to comply with the BOIR requirement of the CTA should now do so (with a “mad rush” expected before the extended “January 13, 2025” deadline).

The plaintiffs in the Texas Top Cop Shop case then petitioned the Fifth Circuit for an emergency rehearing “en banc” (generally requesting the case to be heard before all Fifth Circuit judges, and not just a panel of Fifth Circuit judges), and on December 26, 2024, the Fifth Circuit, in an “Order” in the Texas Top Cop Shop case (Texas Top Cop Shop, Inc. v. Garland, No. 24-40792, 2024 WL 5224138 (5th Cir. 2024)), vacated the prior Fifth Circuit “December 23 stay of injunction” decision and thereby allowed the “December 3 injunction” decision enjoining enforcement of the BOIR requirement of the CTA to again be in effect. As a result, as of December 26, 2024, again the general advice was that reporting companies that had not yet made filings with FinCEN to comply with the BOIR requirement of the CTA should hold off on doing so.

The government then filed an emergency application with the United States Supreme Court to stay the nationwide preliminary injunction enjoining enforcement of the BOIR requirement of the CTA. On January 23, 2025, the Supreme Court, in the Texas Top Cop Shop case (McHenry v. Texas Top Cop Shop, Inc., Docket Number 24A653, 604 U.S. ____ (2025)), granted the government’s application for stay of the injunction, pending disposition of a pending appeal “on the merits” (to be decided on the substantive law applicable in the case, and not just on procedural grounds) in the Fifth Circuit and a possible future appeal “on the merits” in the Supreme Court.

With the Supreme Court’s decision last week to stay the “Texas Top Cop Shop December 3” injunction, one might think that “BOIR/FinCEN” reporting is again recommended. However, such is not the case. While the focus was on the Texas Top Cop Shop case, on January 7, 2025, in the case of Smith v. United States Department of the Treasury, No. 6:24-cv-336-JDK, 2025 WL 41924 (E.D. Tex. 2025), the United States District Court for the Eastern District of Texas issued a second nationwide preliminary injunction that enjoined enforcement of the BOIR requirement of the CTA. The Supreme Court’s decision only related to the nationwide injunction issued in the Texas Top Cop Shop case; it did not at all relate to the nationwide injunction issued in the Smith case. Thus, the “Smith” nationwide injunction enjoining enforcement of the BOIR requirement of the CTA currently remains in effect. As stated in an “Alert” issued by FinCEN on January 24, 2025:

“On January 23, 2025, the Supreme Court granted the government’s motion to stay a nationwide injunction issued by a federal judge in Texas (Texas Top Cop Shop, Inc. v. McHenry – formerly, Texas Top Cop Shop v. Garland). As a separate nationwide order issued by a different federal judge in Texas (Smith v. U.S. Department of the Treasury) still remains in place, reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”

As a result, as of January 24, 2025, the general advice remained that reporting companies that had not yet made filings with FinCEN to comply with the BOIR requirement of the CTA should hold off on doing so.

What will be the next development in this continuing saga of “BOIR/FinCEN” reporting? It will be important to see what position the Trump administration takes toward “BOIR/FinCEN” reporting. Given the general tendency of the Trump administration to oppose government regulation of businesses, it is possible that the Trump administration will not enforce “BOIR/FinCEN” reporting. In addition, bills have been introduced in Congress to repeal the CTA. Judicial action also may be relevant. Beyond the continuing appeals in the Texas Top Cop Shop case (and possible appeals in the Smith case), there is pending litigation in at least the United States Courts of Appeal for the Fourth, Ninth, and Eleventh Circuits that challenges the constitutionality of the CTA. Reporting companies should remain alert in monitoring the next development in the continuing saga of “BOIR/FinCEN” reporting.

If you have any questions concerning “BOIR/FinCEN” reporting, please discuss them with your advisers.

Note – “January 1, 2025 Effective” Laws

As we enter year 2025, it is important to remember that January 1 is a common date for new laws to be effective. Such is the case in Illinois, as it has been estimated that approximately 300 new Illinois laws became effective on January 1, 2025. Among these new Illinois laws are increased protections for “whistleblower” employees and from discrimination based on personal reproductive health decisions (such as using contraception, fertility treatments, or pregnancy care) or family responsibilities (such as caring for a family member), increases in the minimum wage to $15 per hour for most workers and to $9 per hour for tipped workers, restrictions on non-compete and non-solicitation agreements for certain licensed mental health professionals and construction workers, a requirement that condominiums provide an accessible parking space to a unit owner with a disability, an extension of the time to file a civil rights complaint from 300 days to 2 years, and an update of the rules concerning the rights of student-athletes to earn “NIL” (“name, image, and likeness”) compensation. As ignorance of the law generally is not a defense, it is important that you familiarize yourself with the “January 1, 2025 effective” laws in your applicable jurisdiction (both Federally and in your applicable state, whether Illinois or wherever is applicable for you).

If you have any questions concerning the “January 1, 2025 effective” laws in your jurisdiction, please discuss them with your advisers.

If you wish to discuss any of the above, find Pen Pal Gary’s contact info here.

Disclaimer: please note that nothing in this article is intended to be, or should be relied on as, legal advice of any kind. Neither LHBR Consulting, LLC nor Gary Stern provides legal services of any kind.