The last few months have felt like a never-ending loop of the children’s game “Red Light, Green Light” for American business owners. Representatives from qualifying businesses are trapped on a rollercoaster that is the Corporate Transparency Act, and the question of whether FinCEN’s Beneficial Ownership Information reporting requirement is constitutional fuels the ride.
The original deadline for most reporting companies (referring to those registered to do business prior to January 1, 2024) was January 1, 2025. With year end around the corner, those with concerns about the constitutionality of the reporting requirement were on the brink of needing to make a decision: put aside their concerns and comply or risk steep fines.
However, on December 3, 2024, the U.S. District Court for the Eastern District of Texas ordered a nationwide preliminary injunction against FinCEN’s Beneficial Ownership Information reporting requirement, part of the Corporate Transparency Act (CTA). With less than thirty days to go before the original reporting deadline, interested parties who were hesitant and reluctantly preparing to file, breathed a collective sigh of relief at the Court’s decision. However, that feeling of validation was short-lived because a mere 20 days later, the U.S. Court of Appeals for the Fifth Circuit stayed the District Court’s injunction. On December 23, 2024, a federal Court of Appeals decided reporting companies must file beneficial ownership information with FinCEN. But still, it does not end. After a quick court closure for Christmas, a different panel in the same Court issued an order vacating the decision from just days before.
What does it all mean? As of publication of this post, it means the original injunction stands and therefore, the BOI reporting requirement is not enforceable . . . for now. But, this ping-pong match is far from over and whether the BOI reporting requirement is enforceable remains to be seen.
That said, if you have not already filed your report, consider preparing the necessary information in case there is another quick shift. Prior to the most recent decision, the Department of Treasury extended the reporting deadlines as explained below. Again, as of December 27, 2024, reporting companies are not legally required to comply with these requirements but since the issue is changing almost daily at this point, it is wise to have these dates on your radar:
- Reporting companies created or registered before January 1, 2024 or that were created or registered in the U.S. on or before September 4, 2024 must file their initial BOI report by January 13, 2025.
- Reporting companies created or registered in the U.S. between December 3, 2024 and December 23, 2024 have an additional 21 days from their original filing deadline to file their initial BOI report.
- Reporting companies that qualify for disaster relief should comply with their applicable deadlines.
- Reporting companies created or registered in the U.S. on or after January 1, 2025 have 30 days from the date they receive actual or public notice that their registration is effective to file their initial BOI report.
That said, if you are hesitant to file a BOI report, you can certainly wait until there is a firm deadline to do so. If you do not want to monitor minute-by-minute changes but you do want to avoid the potential for costly fines, we recommend taking a proactive approach to preparation: collect all information needed to complete your filing so that when the deadline does arrive, you will have everything you need to easily submit the report within just a few minutes.
Not sure how the CTA and FinCEN’s BOI reporting guideline affects you or if you are a qualifying business? Contact a business attorney, like the team at Executive Legal to discuss what information you need to complete the filing, confirm your deadline, and to make sure you understand the potential impact of the BOI report on your business and personal privacy.
