The Fifth Circuit Court of Appeals has lifted the injunction placed on Beneficial Ownership Information (BOI) reporting requirements by a district court, allowing enforcement to resume. In response to the court’s decision, the Financial Crimes Enforcement Network (FinCEN) extended the filing deadline for most companies to submit BOI reports to January 13, 2025, acknowledging delays caused by the earlier injunction.
On December 3, 2024, a federal district court declared the Corporate Transparency Act (CTA) likely unconstitutional, issuing a temporary injunction that halted the enforcement of BOI reporting obligations. This ruling prevented FinCEN from implementing its reporting requirements while the case was ongoing. The Department of Justice (DOJ) challenged this decision by filing an appeal on December 5, 2024. Subsequently, on December 13, the Attorney General requested an emergency stay of the injunction. The Fifth Circuit Court granted this request on December 23, 2024, lifting the temporary block in the case of Texas Top Cop Shop, Inc. v. Garland.
As a result, companies required to file beneficial ownership information must now comply with the regulations unless they qualify for specific exemptions. To accommodate time lost due to the injunction, the Department of the Treasury adjusted the reporting deadlines:
- Companies created or registered before January 1, 2024, now have until January 13, 2025, to file their initial BOI reports, instead of the original January 1, 2025, deadline.
- Companies created or registered between December 3, 2024, and December 23, 2024, have an additional 21 days from their original deadlines to file their reports.
- Companies eligible for disaster relief may qualify for extensions beyond January 13, 2025, and should adhere to the later applicable deadline.
- Entities created or registered after January 1, 2025, have 30 days from the notice of creation or registration to file BOI reports.
Entities Required to File
The BOI reporting requirement applies to “reporting companies,” which include both domestic and foreign entities. Domestic reporting companies encompass corporations, LLCs, and other entities created by filing with a U.S. secretary of state. Foreign entities registered to do business in the U.S. through state filings are also subject to these rules.
Information Required
Details about the Reporting Company:
Full legal name and any trade or DBA names.
Current U.S. address.
State or jurisdiction of formation.
Employer Identification Number (EIN) or Tax Identification Number (for foreign entities).
Details about Beneficial Owners:
Beneficial owners are individuals who directly or indirectly control the reporting company or own at least 25% of its ownership interests. Required information includes:
Full legal name.
Date of birth.
Residential address.
Unique identification number from a passport or driver’s license, along with a copy of the unexpired document.
Details about Company Applicants:
Company applicants are individuals who filed the document that created or registered the reporting company. Information required for company applicants is the same as for beneficial owners. For companies created or registered on or after January 1, 2024, at least one or two applicants must be reported.
Penalties for Non-Compliance
Failure to submit accurate or updated BOI reports may result in severe penalties. These include:
Civil fines of up to $500 per day.
Potential imprisonment of up to two years and/or fines up to $10,000.
Accountability for senior officers of non-compliant entities.
Exemptions
Certain entities are exempt from the BOI reporting requirements. These include publicly traded companies, nonprofits, banks, investment funds, insurance companies, accounting firms, utility companies, and inactive entities.
Additionally, large operating companies may qualify for exemptions if they meet specific criteria:
Employ more than 20 full-time U.S. employees.
Maintain a physical operating presence in the U.S.
Report gross receipts or sales exceeding $5 million on their federal income tax return.
A unique exemption applies to plaintiffs involved in National Small Business United v. Yellen. In this case, a federal court in Alabama ruled that the Corporate Transparency Act exceeds constitutional limits and blocked its enforcement against specific plaintiffs, including Isaac Winkles and the National Small Business Association. While the DOJ has appealed this ruling, the exemption remains applicable only to those entities directly involved in the lawsuit.
Compliance Moving Forward
Despite ongoing litigation, FinCEN continues to enforce BOI reporting requirements under the Corporate Transparency Act. As emphasized by the Fifth Circuit Court’s decision, companies not covered by specific exemptions must comply by submitting their beneficial ownership reports by the revised deadlines. This regulatory framework aims to increase transparency and combat financial crimes, though legal challenges continue to shape its implementation.