CTA Update: CTA Enforceable Again After Smith Court Stays Its Order; FinCEN Provides Extension to at Least March 21, 2025 for Reporting Entities
Client Alert | February 19, 2025
On February 18, 2025, the U.S. District Court for the Eastern District of Texas entered a stay of its January 7, 2025 order that had paused the “Reporting Rule” implementing the Corporate Transparency Act (CTA). On February 19, 2025, the Financial Crimes Enforcement Network (FinCEN) issued guidance that extends the reporting deadline for all reporting companies until at least March 21, 2025. In its guidance, FinCEN also noted that it may further modify this deadline.
Entities that may be subject to the CTA and its associated Reporting Rule that have not filed Beneficial Ownership Information (BOI) reports should consult with their CTA advisors as necessary to understand their obligations now that the CTA and the Reporting Rule are enforceable again, and BOI reports for the vast majority of entities will now be due by March 21, 2025.
On December 3, Judge Mazzant of the U.S. District Court for the Eastern District of Texas ruled that the CTA was likely unconstitutional, issued a nationwide preliminary injunction against enforcement of the law, and postponed the effective date of the Reporting Rule that set filing deadlines for compliance, in Texas Top Cop Shop, Inc. et al. v. Garland et al. (“Texas Top Cop Shop”).[1] After substantial litigation, that order was ultimately stayed by the Supreme Court on January 23, 2025.[2] The Court’s decision was 8–1.
In a separate case decided in early January, but prior to the Supreme Court’s decision to stay the Texas Top Cop Shop order, Judge Kernodle of the U.S. District Court for the Eastern District of Texas also ruled that the CTA was likely unconstitutional, in Smith v. U.S. Department of the Treasury (“Smith”).[3] Judge Kernodle enjoined enforcement of the CTA with respect to the plaintiffs in that case and stayed the effective date of the Reporting Rule nationwide.[4]
On February 5, 2025, the Department of the Treasury asked Judge Kernodle to stay the order in Smith and filed a notice of appeal to the U.S. Court of Appeals for the Fifth Circuit.[5] Additionally, on February 7, 2025, the Department of Justice filed appellate briefs defending the constitutionality of the CTA in separate cases pending in the Fourth and Fifth Circuits.[6]
On February 18, 2025, Judge Kernodle issued a stay of his January decision in Smith.[7]
On February 19, 2025, FinCEN issued guidance regarding the applicable deadlines now that no court orders bar enforcement of the CTA nationwide.[8] In its guidance, FinCEN extended the reporting deadline for reporting companies to March 21, 2025, except for reporting entities previously granted extensions even beyond March 21, 2025 (for example, because of natural disasters).[9] FinCEN added that during the period between February 19 and March 21, 2025, FinCEN “will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks.”[10] FinCEN also stated it intends to revise the Reporting Rule to reduce the burden for lower-risk entities, including many U.S. small businesses.[11]
The government’s request for a stay in Smith, its merits briefs in the Fourth and Fifth Circuits, and FinCEN’s recent guidance, all indicate that the Trump Administration’s Departments of Justice and the Treasury will likely continue defending the constitutionality of the CTA and Reporting Rule going forward. At the same time, FinCEN has indicated openness to revising the Reporting Rule to reduce the burden for some businesses.
While the Reporting Rule is enforceable again now that no judicial stays remain in effect, litigation remains ongoing, and it is still theoretically possible that another court could enjoin enforcement of the law against particular plaintiffs or nationwide. Moreover, Congress could intervene by enacting new legislation: the House of Representatives recently passed a bill seeking to extend the deadline to file BOI reports until January 1, 2026.[12] The Senate has yet to act on the bill.
Entities that believe they may be subject to the CTA and its associated Reporting Rule should closely monitor this matter, and consult with their CTA advisors as necessary, to understand their obligations now that the CTA is enforceable again and BOI reports for most entities are due by March 21, 2025.
For additional background information, please refer to our Client Alerts issued on December 5, December 9, December 16, December 24, and December 27, 2024, and January 24, 2025.
[1] Texas Top Cop Shop, Inc. et al. v. Garland et al., No. 4:24-CV-478, Dkt. 30 (E.D. Tex. Dec. 3, 2024).
[2] Order, McHenry v. Top Cop Shop, Inc., No. 24A653 (U.S. Supreme Court Jan. 23, 2025).
[3] Smith v. U.S. Dep’t of the Treasury, No. 6:24-cv-00336-JDK, Dkt. 30 at 33–34 (E.D. Tex. Jan. 7, 2025).
[4] Id.
[5] Smith v. U.S. Dep’t of the Treasury, No. 6:24-cv-00336-JDK, Dkts. 32, 33 (E.D. Tex. Feb. 5, 2025).
[6] See Community Assocs. Institute v. U.S. Dep’t of the Treasury, No. 24-2118, Dkt. 40 (4th Cir. Feb. 7, 2025); Texas Top Cop Shop, Inc. et al. v. Bondi et al., No. 24-40792, Dkt. 212 (5th Cir. Feb. 7, 2025). Additionally, we note that another district court has now held that the CTA is constitutional. Boyle v. Bessent, No. 2:23-cv-00081, Dkt. 51 (D. Me. Feb. 14, 2025).
[7] Smith v. U.S. Dep’t of the Treasury, No. 6:24-cv-00336-JDK, Dkt. 39 (E.D. Tex. Feb. 17, 2025).
[8] https://fincen.gov/sites/default/files/shared/FinCEN-BOI-Notice-Deadline-Extension-508FINAL.pdf. Additionally, nothing in FinCEN’s guidance disturbs the Reporting Rule’s requirements that companies created or registered in 2024 have 90 days to file their BOI reports and companies created or registered in 2025 have 30 days to file their BOI reports. Therefore, any entity created in 2024 whose reporting deadline had not yet passed should have until March 21, 2025 or 90 days after creation or registration to file their BOI reports, whichever is later. Companies created or registered on or after January 1, 2025 will have until March 21, 2025 or 30 days after creation or registration to file their BOI reports, whichever is later.
[9] Id.
[10] Id.
[11] Id.
[12] Protect Small Businesses from Excessive Paperwork Act, H.R. 736 (119th Cong. 2025).
Gibson Dunn has deep experience with issues relating to the Bank Secrecy Act, the Corporate Transparency Act, other AML and sanctions laws and regulations, and challenges to Congressional statutes and administrative regulations.
For assistance navigating white collar or regulatory enforcement issues, please contact the authors, the Gibson Dunn lawyer with whom you usually work, or any leader or member of the firm’s Anti-Money Laundering, Administrative Law & Regulatory, Investment Funds, Real Estate, or White Collar Defense & Investigations practice groups.
Please also feel free to contact any of the following practice group leaders and members and key CTA contacts:
Anti-Money Laundering:
Stephanie Brooker – Washington, D.C. (+1 202.887.3502, sbrooker@gibsondunn.com)
M. Kendall Day – Washington, D.C. (+1 202.955.8220, kday@gibsondunn.com)
David Ware – Washington, D.C. (+1 202.887.3652, dware@gibsondunn.com)
Ella Capone – Washington, D.C. (+1 202.887.3511, ecapone@gibsondunn.com)
Sam Raymond – New York (+1 212.351.2499, sraymond@gibsondunn.com)
Administrative Law and Regulatory:
Stuart F. Delery – Washington, D.C. (+1 202.955.8515, sdelery@gibsondunn.com)
Eugene Scalia – Washington, D.C. (+1 202.955.8673, dforrester@gibsondunn.com)
Helgi C. Walker – Washington, D.C. (+1 202.887.3599, hwalker@gibsondunn.com)
Matt Gregory – Washington, D.C. (+1 202.887.3635, mgregory@gibsondunn.com)
Investment Funds:
Kevin Bettsteller – Los Angeles (+1 310.552.8566, kbettsteller@gibsondunn.com)
Shannon Errico – New York (+1 212.351.2448, serrico@gibsondunn.com)
Greg Merz – Washington, D.C. (+1 202.887.3637, gmerz@gibsondunn.com)
Real Estate:
Eric M. Feuerstein – New York (+1 212.351.2323, efeuerstein@gibsondunn.com)
Jesse Sharf – Los Angeles (+1 310.552.8512, jsharf@gibsondunn.com)
Lesley V. Davis – Orange County (+1 949.451.3848, ldavis@gibsondunn.com)
Anna Korbakis – Orange County (+1 949.451.3808, akorbakis@gibsondunn.com)
White Collar Defense and Investigations:
Stephanie Brooker – Washington, D.C. (+1 202.887.3502, sbrooker@gibsondunn.com)
Winston Y. Chan – San Francisco (+1 415.393.8362, wchan@gibsondunn.com)
Nicola T. Hanna – Los Angeles (+1 213.229.7269, nhanna@gibsondunn.com)
F. Joseph Warin – Washington, D.C. (+1 202.887.3609, fwarin@gibsondunn.com)
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.