On December 26, 2024, the Fifth Circuit lifted its stay of the district court’s injunction — thus, re-instating the injunction against enforcement of the CTA’s beneficial ownership reporting requirement. Coincidentally, the order was issued on the same day that the USDA’s Cooperative Services Branch issued guidance to cooperatives about compliance.
Many rural utility cooperatives should consider several exemptions from the rule, including exemptions for certain tax-exempt entities and public utilities. Even these exemptions are defined with exceptions, so all rural utility cooperatives should consult their legal counsel.
Background on CTA’s Beneficial Ownership Rules
The Corporate Transparency Act was enacted in January 2021. This legislation marked a significant shift in U.S. efforts to combat financial crimes by targeting the use of shell companies often employed in money laundering, tax evasion, and terrorism financing. The CTA requires most U.S. corporations, LLCs, and similar entities to report their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). Beneficial owners are defined as individuals who exercise substantial control over an entity or own at least 25% of its equity.
USDA Guidance to Cooperatives
The guidance states:
Cooperatives and other businesses are again required to file Corporate Transparency Act reports.
On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit stayed the nationwide injunction pending the outcome of the Financial Crimes Enforcement Network’s (“FinCEN”) appeal. In response to the Fifth Circuit’s stay of the injunction, FinCEN issued an alert titled “Updates to Beneficial Ownership Information Reporting Deadlines” on its website.
Cooperatives and other reporting businesses that were created prior to January 1st, 2024, now have until January 13, 2025 to file a beneficial ownership information report. Co-ops must plan to meet this deadline unless further legal developments arise.
The guidance goes into the applicability of the rules, including the exclusions:
Corporations, LLCs, foreign companies, and other entities that file with their State or Tribe must file BOI. Some large and/or highly regulated companies are exempt from BOI reporting including credit unions, public utilities, insurance companies, 501(c) organizations, and large operating companies with 20 or more employees doing more than $5 million in U.S. gross receipts or sales.
Injunction, Stay, and Stay Vacated
A district court issued a nationwide injunction of the CTA’s BOI reporting rule. Texas Top Cop Shop, Inc. v. Garland, No. 4:24-CV-478, 2024 WL 5145951 (E.D. Tex. Dec. 17, 2024). On the government’s appeal, the Fifth Circuit stayed (paused) the injunction, which reinstated the BOI reporting rules. Texas Top Cop Shop, Inc. v. Garland, No. 24-40792, 2024 WL 5203138 (5th Cir. Dec. 23, 2024). Then three days later, the Fifth Circuit vacated (cancelled) the stay, reviving the injunction. Texas Top Cop Shop, Inc. v. Garland, No. 24-40792 (5th Cir. December 26, 2024).
So as it stands as of December 26, 2024, enforcement of the BOI rules has been enjoined.
UPDATE as of February 21, 2025: According to FINCEN
With the February 18, 2025, decision by the U.S. District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex.), beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) are once again back in effect. However, because the Department of the Treasury recognizes that reporting companies may need additional time to comply with their BOI reporting obligations, FinCEN is generally extending the deadline 30 calendar days from February 19, 2025, for most companies.
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.
For more information, visit FINCEN’s BOI page: Beneficial Ownership Information Reporting | FinCEN.gov
UPDATE as of April 23, 2025
On March 2, 2025, the Treasury Department announced it would not enforce BOI reporting against U.S. citizens and domestic reporting companies.
The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either. The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.
