U.S. Court of Appeals Reinstates Beneficial Ownership Information Reporting Requirements
December 27, 2024
The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has extended the deadline for many small businesses to file beneficial ownership information (BOI) reports to January 13, 2025. This comes after a federal appeals court recently granted a motion to lift an injunction put in place by a district court ruling.
How We Got Here
Under the Corporate Transparency Act (CTA), the BOI reporting requirements went into effect on January 1, 2024. The requirements are intended to help prevent criminals from using businesses for illicit activities, such as money laundering and fraud. The CTA requires many small businesses to provide information about their “beneficial owners” (the individuals who ultimately own or control the businesses) to FinCEN. Failure to submit a BOI report by the applicable deadline may result in civil or criminal penalties, or both.
Under the CTA, the exact deadline for BOI compliance depends on the entity’s date of formation. Reporting companies created or registered before January 1, 2024, have one year to comply by filing initial reports, which means their deadline would be January 1, 2025. Those created or registered on or after January 1, 2024, but before January 1, 2025, have 90 days to file their initial reports upon receipt of their creation or registration documents. Entities created or registered on or after January 1, 2025, have 30 days upon receipt of their creation or registration documents to file initial reports.
District Court Issues an Injunction
On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued an order granting a nationwide preliminary injunction that:
Enjoins the CTA, including enforcement of the statute and regulations implementing its BOI reporting requirements, and,
Stays all deadlines to comply with the CTA’s reporting requirements.
The U.S. Department of Justice, on behalf of the Treasury Department, filed an appeal in the case on December 5, 2024.
Fifth Circuit Lifts the Injunction
On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit issued a ruling to lift the preliminary injunction. FinCEN announced that reporting companies were once again required to provide BOI. However, the January 1 deadline has been extended to January 13, 2025. There are some exceptions to the deadline. For example, reporting companies qualifying for disaster relief may have extended deadlines beyond January 13.
Turn to Your Legal Advisor for Help
With the BOI reporting requirements back, it’s time for affected small businesses to get to work. The filing deadline is right around the corner. Contact your attorney or legal advisor if you have questions about how to proceed.
