For those following the ping-pong match in the federal courts, as of February 17, 2025, the Corporate Transparency Act (“CTA”) has bounced back to the government’s side and is again in effect, requiring all “reporting companies” to file an “initial” and any required “updated” Beneficial Ownership Information (“BOI”) Reports. To give reporting companies an opportunity to comply (since the original January 1, 2025 deadline passed during the nationwide injunction), FinCEN has announced that companies who have not filed their BOI Reports must do so by March 21, 2025. A discussion of the CTA and its filing requirements can be found here: The Corporate Transparency Act: New Reporting Requirements for Businesses. Details of the relevant cases we are following are discussed below.
The Pending Cases
National Small Business United v. Yellen, Case No. 5:22-cv-1448-LCB (C.D. Ala.). On March 1, 2024, a federal district court in Alabama held that the CTA is unconstitutional, but barred government enforcement against only the plaintiffs in that action. The government appealed, and the Eleventh Circuit heard oral arguments on September 27, 2024, but has not yet issued a ruling. FinCEN currently admits that the reporting companies included in the plaintiff group do not need to file BOI Reports until further order of the Court.
Robert J. Gargasz Co. v. Yellen, No. 1:23-cv-02468 (N.D.Ohio). On April 17, 2024, the case was stayed pending ruling from the Eleventh Circuit in the National Small Business United case above.
Small Bus. Ass’n of Mich. v. Yellen, 1:24-cv-00314 (W.D. Mich.). Both the plaintiffs and the government filed motions for summary judgment on August 9, 2024, which were argued on December 16, 2024. To date, no decision has been published.
Taylor v. Yellen, No. 2:24-cv-00527 (D.C.Utah). On July 29, 2024, the plaintiffs filed a motion for preliminary injunction, seeking to bar the government’s enforcement of the CTA pending outcome of the case. On October 31, 2024, the government filed a motion to dismiss the complaint for failure to state a claim and for lack of jurisdiction. Both motions were heard on December 19, 2024, and the district court in Utah denied both motions, noting the nationwide injunction entered by Texas Top Cop Shop (below) made plaintiffs’ motion moot. The parties agreed to stay the case for 90 days pending the new presidential election.
Boyle v. Yellen, Case No. 2:24-cv-00081 (D. Maine). Both the plaintiffs and the government filed motions for summary judgment in June 2024, which were argued on January 3, 2025. On February 14, 2025, a federal district court in Maine concluded: “the CTA is a valid exercise of congressional power” and granted the government’s motion for summary judgment.
Firestone, et al. v. Janet Yellen, et al. Case No. 3:24-cv-1034-SI (D. Or.). On September 20, 2024, a federal district court in Oregon denied the plaintiffs’ motion for preliminary injunction. The plaintiffs appealed to the Ninth Circuit. As the January 1, 2025 BOI Report filing deadline loomed without progress on the appeal, the plaintiffs sought an injunction from plaintiffs’ filing obligations pending the appeal, which the district court denied on December 18, 2024.
Community Ass’n Inst. v. Yellen, Case No. 24-cv-1597 (E.D. Va.). On October 24, 2024, a federal district court in Virginia denied the plaintiffs’ motion for preliminary injunction. The plaintiffs appealed to the Fourth Circuit, and the appeal is pending.
Texas Top Cop Shop, Inc. v. Garland, Case no. 4:24-cv-478 (E.D. Tex.). On December 3, 2024, a federal district court in Texas granted the plaintiffs’ motion for preliminary injunction, barring the government from enforcing the CTA and its regulations nationwide. The court opinion confirmed that “reporting companies need not comply with the CTA’s January 1, 2025 BOI reporting deadline pending further order of the Court.” The government promptly appealed to the Fifth Circuit Court of Appeals. On December 31, 2024, the U.S. Solicitor General submitted an application to U.S. Supreme Court Justice Alito, requesting that the nationwide injunction be stayed pending the government’s appeal. The request was made under Supreme Court Rule 23, allowing a single justice to grant a stay. On January 23, 2025, Justice Alito granted the stay, and Justice Gorsuch concurred, asking the Supreme Court to promptly decide whether a single district court may issue universal injunctive relief. Justice Jackson dissented, opining that the government’s claim of immediate harm was unsupported given that the CTA’s January 1, 2024 implementation came four years after the enactment of the law, and the appellate procedure should “run its course.” See McHenry v. Texas Top Cop Shop, Inc., 24A653, 604 U.S. ___, 2025 WL 272062 at *1.
Smith, et al. v. U.S Department of the Treasury, et al., Case No. 6:24-cv-00336 (E.D. Tex.). On January 7, 2025, a different judge in the same federal district court in Texas which issued the Texas Top Cop Shop opinion granted the plaintiffs’ motion for preliminary injunction, again issuing a nationwide injunction barring the government from enforcing the CTA. The government did not appeal until February 5, 2025, and on that date also filed a motion to stay the Court’s January 7th Order pending the outcome of the appeal. The Court granted the government’s motion to stay on February 17, 2025, which terminated the nationwide injunction, imposing the BOI filing requirement on tens of millions of U.S. businesses once again. The sole reason for the Court’s decision was because of the U.S. Supreme Court’s order in the Texas Top Cop Shop case.
The Federal Ping-Pong Match
While the narrow injunction was entered early in March 2024 in the National Small Business case, it did not apply to the tens of millions of businesses required to report on or before January 1, 2025. The industry waited for months for further relief, which did not come until the eleventh hour. On December 3, 2024, the Texas Top Cop Shop case finally entered a nationwide injunction. The business world breathed a sigh of relief. FinCEN encouraged businesses to make “voluntary” BOI filings. Unfortunately, the holding came too late for the hundreds of thousands of businesses who were already forced to disclose the personal information about their beneficial owners and/or pay a fee to a third party to assist with the filing.
On December 23, 2024, on the eve of the holidays, a motions panel of the Fifth Circuit reviewing the Texas Top Cop Shop appeal stayed the nationwide injunction. On December 26, 2024, the merits panel of the Fifth Circuit reinstated the injunction. While some in the industry reacted dramatically to the events, others had learned by then to wait for the next swing of the paddle.
On January 7, 2025, the Smith case agreed with the Texas Top Cop Shop opinion and entered its own nationwide injunction, barring enforcement of the CTA. On January 23, 2025, U.S. Supreme Court Justice Alito granted the government’s request to stay the nationwide injunction. However, since the Smith injunction remained pending, FinCEN continued to accept BOI Reports on a “voluntary” basis.
Another volley. On February 14, 2025, the Maine district court in Boyle found the CTA constitutional on summary judgment, creating a circuit split. On February 17, 2025, the Texas district court in Smith granted the government’s request to stay the nationwide injunction based on the U.S. Supreme Court’s January 23, 2025 stay in the Texas Top Cop Shop case.
Does My Business Need to File a BOI Report?
Most likely, yes. As of February 17, 2025, the CTA is back in effect, requiring BOI filings. Most businesses are obligated to file an “initial” BOI Report, unless an exemption applies. The government has estimated that at least 37 million entities were required to file an “initial” BOI report in 2024. For those that have not yet filed an “initial” BOI Report, the deadline is now March 21, 2025. Given the complexity of some BOI filings, businesses are encouraged to begin the process of gathering and analyzing information on who is deemed a “beneficial owner” based on guidance provided by FinCEN.
Gensburg Calandriello & Kanter, P.C. can assist all businesses, large or small, with determining whether they are considered a “reporting company,” whether the entity qualifies for an exemption, and if not, determining the “beneficial owners” and completing the BOI Report filing. Please contact our office with questions.
Sandra Mertens
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