Corporate Transparency Act Update: No Deadline Extension in Spending Bill, Injunction Remains

As businesses prepared for potential changes to the Corporate Transparency Act (CTA) reporting requirements, a significant update has shifted the landscape. The bill passed Friday night to avert a federal government shutdown did not include a one-year extension for the deadline to file Beneficial Ownership Information (BOI) reports. This extension had been included in an earlier version of the bill but was ultimately excluded from the final legislation.

The Federal Funding Bill: What Else Did It Include?

The funding bill, formally titled the Continuing Appropriations and Extensions Act, 2025, ensures that the federal government remains operational through March 14, 2025, avoiding the disruptions associated with a shutdown. However, in typical fashion, the bill encompasses several unrelated provisions that affect various sectors. Here are the key highlights:

• Disaster Relief and Farm Aid: Over $100 billion in emergency funding was allocated to support communities affected by recent natural disasters and to provide economic assistance to struggling farmers.

• National Security Investments: Provisions were included to tighten restrictions on U.S. investments in foreign adversaries, including China, to safeguard national security.

• Healthcare: The bill includes measures to improve the transparency of prescription drug prices by regulating pharmacy benefit managers (PBMs).

• Infrastructure: Funding for several critical infrastructure projects was approved, including resources to address aging public transportation systems and enhance climate resilience.

Despite these additions, the absence of the BOI reporting extension underscores the complexities and competing priorities Congress faced in finalizing the legislation.

The Current Status of BOI Reporting Deadlines

While the legislative extension failed to make it into the final bill, a nationwide court injunction continues to prevent the enforcement of the BOI reporting requirements. This injunction, issued in the case Texas Top Cop Shop, Inc. v. Garland (No. 4:24-CV-478, E.D. Texas, Dec. 3, 2024), has created uncertainty for businesses regarding their reporting obligations.

Under the injunction:

• The CTA and its BOI reporting rules cannot be enforced.

• Reporting companies are not required to comply with the January 1, 2025, BOI reporting deadline unless further court orders state otherwise.

This ruling has paused the clock for millions of entities that would otherwise face the fast-approaching compliance deadline.

What Happens Next?

The Department of Justice (DOJ) has appealed the injunction to the Fifth Circuit Court of Appeals. The DOJ has requested the court rule on its request for a stay by December 27, 2024, stating that a timely decision is necessary to "ensure that regulated entities can be made aware of their obligation to comply before January 1, 2025."

Should the Fifth Circuit grant the stay, the BOI reporting requirements could be reinstated, leaving businesses with little time to prepare for compliance by the original deadline. If the stay is denied, the injunction will remain in effect, and businesses will not be required to report until the legal challenges are resolved.

Key Takeaways for Businesses

With the legislative extension off the table and the injunction still in effect, here are the immediate considerations for businesses:

1. No Immediate Action Required: Businesses are not currently obligated to file BOI reports due to the ongoing injunction. Compliance with the January 1, 2025, deadline is on hold.

2. Monitor Legal Developments: The Fifth Circuit’s ruling on the DOJ’s request for a stay, expected by December 27, will be a critical update. Businesses should stay informed and ready to act if compliance obligations are reinstated.

3. Prepare for Possible Compliance: Although the deadline is not enforceable at the moment, businesses should use this time to organize their beneficial ownership information in case the reporting requirements are reinstated.

4. Seek Legal Guidance: Consulting with a legal professional can help businesses navigate this uncertain regulatory environment and prepare for potential future obligations.

Conclusion

The exclusion of the BOI deadline extension from the final spending bill, coupled with the ongoing nationwide injunction, has left the Corporate Transparency Act’s reporting requirements in legal limbo. Businesses should remain vigilant, prepared for rapid developments, and ready to comply if the injunction is lifted.

Meanwhile, the federal funding bill ensures continuity for critical government operations, providing significant relief to disaster-affected communities and bolstering national security. However, for millions of reporting companies, uncertainty over the BOI requirements remains the pressing issue.

Stay tuned for updates on this evolving situation and how it may affect your business’s obligations under the CTA.

If you have any questions, reach out to us at hello@geffrard.com.