Breaking Update:
Due to a recent federal court order, reporting companies are not currently required to file Beneficial Ownership Information (BOI) with FinCEN.
There is no liability for failing to file while the order is in effect, but companies may continue to voluntarily submit reports.
Case History & Legal Developments:
- December 3, 2024: The case, Texas Top Cop Shop, Inc., et al. v. Garland, et al. (No. 4:24-cv-00478, E.D. Tex.), issued a preliminary injunction that halted the enforcement of beneficial ownership reporting requirements under the Corporate Transparency Act (CTA).
- December 5, 2024: The Department of Justice (DOJ), on behalf of the Department of the Treasury, filed a Notice of Appeal.
- December 23, 2024: The Fifth Circuit Court of Appeals granted a stay of the preliminary injunction, allowing the enforcement of reporting requirements. FinCEN extended the BOI reporting deadline to January 13, 2025.
- December 26, 2024: A different Court of Appeals for the Fifth Circuit vacated the stay, reinstating the injunction. The BOI reporting requirement is suspended.
- On December 31, 2024, the DOJ sought a stay of the injunction pending an ongoing appeal from the United States Supreme Court. The BOI reporting requirement remains suspended.
Background Information:
As a reminder, the Corporate Transparency Act (CTA) requires BOI reporting, and will impact most LLCs, corporations, limited partnerships, and other closely held entities. Congress enacted the CTA to create a national database of the beneficial owners of companies in the US. The law took effect January 1, 2024, and is part of an increasing effort to combat money-laundering, terrorism, fraud, tax evasion and other financial crimes. Exempted from this requirement are entities that are already subject to significant reporting requirements, including (but not limited to):
i) Tax exempt entity that is described in section 501(c) of the Internal Revenue Code (“Code”).
ii) An entity that: (i) employs more than 20 employees on a full-time basis in the United States; (ii) filed in the previous year Federal income tax returns in the United States demonstrating more than $5,000,000 in gross receipts or sales; and (iii) has an operating presence at a physical office within the United States.
How to Proceed:
Future legal actions could reverse the ruling, with the court potentially reinstating the reporting requirements. It is best to remain prepared and ready. ADKF will closely monitor any updates on the situation and provide timely information as it becomes available.