By Griffin Bridgers, J.D., LL.M. (Taxation)

UPDATE AS OF FEBRUARY 27, 2025

In certain geographic locales, it is often said that if you don’t like the weather, you should just wait 30 minutes. Such seems to be the nature of the Corporate Transparency Act.

Less than 24 hours after this newsletter was published, FinCEN issued a press release on February 27 stating that there will be no fines, penalties, or enforcement actions for any failure to file or update BOI information by the current deadlines (March 21, 2025 or, if later, 30 days after filing or a change). As part of its prior promise to explore further relief, FinCEN also stated its intention to provide an interim rule by March 21 regarding filing obligations after that date, along with a notice of proposed rulemaking to be issued later this year which will purportedly update the current regulations under 31 CFR 1010.380. FinCEN has stated its intent in the forthcoming rulemaking to “minimize burden on small businesses while ensuring that BOI is highly useful to important national security, intelligence, and law enforcement activities… .” In the meantime, legislation such as H.R. 736 is still pending.

The Injunction and Subsequent Developments

The Corporate Transparency Act (CTA) has created quite a stir over the last 60 days. The following video humorously summarizes some of the developments through the end of January (while asking whether it is the end of the CTA as we know it).

To sum up where we currently stand after the U.S. District Court for the Eastern District of Texas imposed a nationwide injunction on enforcement of the CTA on December 3, 2024 in Texas Top Cop Shop v. Garland, the following sum up where we found ourselves before February 18:

• The U.S. Supreme Court stayed the injunction in Texas Top Cop Shop v. McHenry; but
• While another injunction in Smith v. Treasury was pending, also in the U.S. District Court for the Eastern District of Texas, FinCEN published an alert noting that filing remains voluntary unless the Smith injunction is stayed, in which case the deadline for filing would be 30 days from the date of the court’s order.

The U.S. District Court for the Eastern District of Texas, on February 18, stayed the injunction from Smith. True to its word, FinCEN published an updated alert on February 19 noting that there was a 30-day deadline to comply with the beneficial ownership information filing requirements. Our new deadline is March 21, unless Congress throws us a bone as we will discuss below.

H.R. 736

Interestingly, the U.S. House of Representatives passed the “Protect Small Businesses from Excessive Paperwork Act of 2025” on February 10, 2025. While the passing of this bill may not seem significant in and of itself, it is important to note that the vote was unanimous – 408 yeas to 0 nays. This bill, with obvious bipartisan support based on the roll call, has been sent to the Senate. If passed, this bill will extend the filing deadline under 51 U.S.C. Section 5331(b)(1)(B) to January 1, 2026 – but only for entities that existed prior to January 1, 2024.

Many wondered whether the pendency of this bill would, perhaps, encourage FinCEN to further delay filing requirements as it did with Smith. Unfortunately, it did not. This leaves us with a question of what we should do for now.

Type of Report

If your gut reaction is to think we are in the clear if this measure passes the Senate and is signed into law, think again. As noted above, this bill only applies to reporting companies that existed prior to January 1, 2024. Any entities created on or after January 1, 2024 now only have until, at best, March 21 to file their initial BOI report.

Before this change, the initial report for entities created during 2024 was due within 90 days. Recall however that the injunction in Texas Top Cop Shop was issued on December 3, 2024. If a reporting company was created more than 90 days prior to that date, its filing deadline for its initial report may have occurred before the injunction was issued. Nowhere in the guidance out there do we find what should be done for entities that were, technically, delinquent in their filing obligations before the initial injunction. Does this mean these reports should be filed as soon as possible?

Keep in mind also that updated reports are required if and when BOI changes from what was last reported to FinCEN. The due date for an updated report is within 30 days of such a change. This also could have created a delinquency before the injunction (for changes more than 30 days prior). This also means that a reporting company that went ahead and filed its initial report – whether before, or after, the injunction – could be on the hook for an updated report if any information has changed in the meantime. Likewise, if any individual has obtained a FinCEN identifier, this 30-day update deadline applies to a change in their own information (while, presumably, relieving a reporting company from creating an updated report for a change in address, legal name, or ID for an individual beneficial owner if their FinCEN ID had been used for the initial report).

Note also that corrected reports are sometimes required. What if, before or during the injunction, a reporting company had been proactive and filed an initial report containing incomplete or inaccurate information? Again, the clock may be ticking and may expire before the March 21 deadline if the original report was delinquent prior to the injunction.

While prior FinCEN alerts did not speak to the type of report involved, the latest report does note that the March 21 deadline generally applies to all three types of reports – initial, updated, and corrected. It does not speak to reports that were delinquent before the injunction. On that note, reporting companies having an original deadline after March 21 get to use the later deadline. Since the 90-day initial report deadline for new reporting companies created after December 21, 2024 could fall after the March 21, 2025 date, such entities may benefit from an extended deadline. But, new reporting companies created in 2025 only get 30 days to file their initial report. This means any new reporting company created before February 19 will still be subject to the March 21 deadline.

Scope of Alert, and the Waiting Game?

FinCEN has made three promises in its most recent alert:

Notably, in keeping with Treasury’s commitment to reducing regulatory burden on businesses, during this 30-day period FinCEN will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks.

FinCEN also intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses.

FinCEN will provide an update before [March 21] of any further modification of this deadline, recognizing that reporting companies may need additional time to comply with their BOI reporting obligations once this update is provided.

On balance, this leaves us in an odd conundrum. How likely is the Senate to pass the relief for pre-2024 reporting companies? For reporting companies created during 2024 or 2025, how likely is FinCEN to provide the relief it purports to be exploring? And, how enforceable might this relief (from an executive agency) actually be without legislative action, especially after last year’s U.S. Supreme Court decision in Loper Bright Enterprises v. Raimondo which ended Chevron deference?

For now, we are left with the same conundrum we faced before – should we encourage clients to go ahead and file, or should we wait and see? As with any such question in law dating all the way back to law school, the answer remains, “It depends.”

Stay tuned!

ABOUT THE AUTHOR

Griffin H. Bridgers, J.D., LL.M. is a part-time attorney with the law firm of Hutchins & Associates in Denver, Colorado, and is admitted to practice in Colorado and Tennessee. Griffin also serves as an outsourced estate planning strategist for independent advisory firms including Mosaic Advisors in Houston, Texas and Alpha Principle in Englewood, Colorado. Griffin is a frequent presenter on tax and estate planning topics for estate planning councils, bar associations, and CLE and CPE providers. Since 2020, Griffin has educated fellow attorneys and wealth transfer professionals through his YouTube channel and his newsletter, State of Estates, amassing over 350 video presentations and 150 articles on a variety of topics. Griffin is best known for navigating the education gap between introductory and advanced topics.

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