Federal Reporting Requirement: Beneficial Ownership Reporting Rule (BOI) Filing Requirement Currently Suspended
IMPORTANT UPDATE
What Happened?
We previously communicated information related to the new BOI filing requirements and related January 1, 2025 due date (New Federal Reporting Requirement: Beneficial Ownership Reporting Rule).
There have been recent court decisions related to the constitutionality of the Corporate Transparency Act’s BOI reporting rules enforced by the Financial Crimes Enforcement Network (FinCEN):
- December 3rd a federal District Court Judge in Texas ruled that the Corporate Transparency Act and related BOI filing requirements are “likely” unconstitutional and issued a nationwide temporary injunction to prevent their enforcement. Unlike a previous ruling in Alabama, this injunction applies to all business entities.
- December 5th the Department of Justice filed an appeal and shortly thereafter filed an emergency appeal requesting that the temporary injunction be lifted until the case has been decided.
- December 17th a 1,500-page budget bill is introduced in Congress and includes a provision to delay BOI reporting until Jan 1, 2026. On December 21st a 118-page budget bill is enacted by Congress and does not include the BOI provision.
- December 23rd the 5th Circuit Court of Appeals lifts the temporary injunction. FinCEN announces a deferred filing date of January 13, 2025.
- December 27th another panel of judges in the 5th Circuit ruled that the injunction was proper and should therefore remain in effect. The Court is scheduled to hear oral arguments on March 25th.
- December 31st the Department of Justice filed an emergency application with the U.S. Supreme Court to cancel the 5th Circuit’s injunction and reinstate BOI filing requirements. The plaintiffs have until January 10, 2025, to submit their response.
Where Do We Stand Now?
With the injunction issued on December 3rd in force, the requirement to file BOI reports is no longer in effect. The injunction applies to all entities currently in existence and those created after December 27th. FinCEN has acknowledged this on its website:
In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.
What Should You Do Now?
Clearly, the latest rulings add more confusion to the BOI program and create a split among several federal district courts. There is a possibility another judge may reinstate the injunction before the various court appeals are decided in which case FinCEN would announce a new filing date. The situation is very dynamic and unpredictable.
Businesses who have not yet filed have a few choices:
- Voluntarily file
- Compile the information and documents needed for filing to be ready if and when the injunction is lifted or a decision from the appeal is announced.
- Do nothing and wait until the matter is resolved by the courts.
Alternative #3 is not recommended as this could leave you unprepared and possibly facing a short filing window.
We will keep you posted on further developments.
Please contact us with any questions.
