It’s far short of the one-year delay S-Corp was seeking, but businesses covered by the Corporate Transparency Act received a small stocking stuffer yesterday, courtesy of the Treasury Department.
Following the unfavorable ruling by the Fifth Circuit which reinstated the Corporate Transparency Act, the Financial Crimes Enforcement Network (FinCEN) has extended the general CTA filing deadline two weeks, until January 13th. According to the notice posted on the FinCEN website:
Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)
You can read the entire post here.
Meanwhile, the legal fight is far from over. The plaintiffs in the Fifth Circuit case filed an emergency petition for an en banc hearing by January 6th, or one week before the new filing deadline. The petition was filed last evening and makes the case for why the earlier three-judge panel errored both with necessity of the injunction and on the merits of the case:
The panel had nothing to say about the practical consequences of suddenly reinstating the compliance deadline with just days left to comply, disregarding an obvious consideration that was elaborated upon in amicus briefs by half the states and dozens of major industry groups. Tens of millions of business entities are subject to the CTA’s reporting mandate, and the injunction and its effect have been widely publicized by the media and FinCEN itself. The panel’s decision to bring the CTA back into force with just a few business days remaining in the middle of the holiday season will harm many, as those responsible for reporting scramble to understand and fulfill obligations that the government informed them only weeks ago had been postponed.
And:
At bottom, the panel erroneously accepted the government’s vague assertion that Congress may exercise plenary authority, irrespective of the limits of its enumerated powers, in any field it has legitimately entered. If that were so, then Congress’s longstanding regulation in the healthcare field would have supported the ACA’s insurance mandate. Of course, it did not.
The S Corporation Association is named as an Amici in the petition, as are numerous other trade groups and twenty five states.
We also are waiting for the 11th Circuit to rule on the government’s appeal of the Northern District of Alabama’s decision last March that the CTA is unconstitutional. Oral arguments in that appeal took place in September, so a decision could come at any time.
And finally, we noted in last week’s Wire that a district court in Michigan had signaled serious concerns regarding the scope of the CTA and its incompatibility with the Constitution, suggesting we may soon have a third Federal court ruling against this onerous law.
So a modicum of good news just before Christmas. Existing entities now have an extra two weeks to file their initial beneficial ownership reports, and the legal process may still deliver more meaningful relief. Credit to NFIB for keeping the fight going and to FinCEN for recognizing how disruptive this process has been. More to come.