Important Update: Beneficial Ownership Information Reporting Deadlines

December 27, 2024 – Beneficial ownership information reporting requirement update (subsequent to the December 26, 2024, publication of the article below.)

A Fifth Circuit panel has reinstated a nationwide injunction blocking enforcement of the Corporate Transparency Act, three days after a different panel lifted it.

We will continue to update clients on the status on the Corporate Transparency Act and the BOI reporting requirement as more information is available.

BOI reporting requirement is back in effect with deadline extensions

In light of recent legal developments, the deadlines for filing beneficial ownership information (BOI) with the Financial Crimes Enforcement Network (FinCEN) have been extended. A federal Court of Appeals decision on December 23, 2024, has reinstated the requirement for reportable entities to file ownership information. However, acknowledging the challenges posed by the preliminary injunction period, FinCEN has adjusted reporting deadlines to accommodate these circumstances.

Summary of December 2024 Updates

• On December 3, 2024, the U.S. District Court for the Eastern District of Texas, Sherman Division, issued a nationwide preliminary injunction in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.).
• On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit granted a stay of this injunction, allowing the Corporate Transparency Act (CTA) to remain in effect and underscoring the complex legal landscape surrounding the CTA, with several district courts across the country ruling in favor of the Department of the Treasury and upholding the constitutionality of the CTA.
• Later on December 23, 2024, FinCEN offered relief by extending certain reporting deadlines in response to concerns that the earlier court decisions would cause undue hardship.

Revised Reporting Deadlines

• Reportable entities created or registered before January 1, 2024, have until January 13, 2025, to file initial beneficial ownership reports.
• Reportable entities formed between January 1, 2024, and September 2, 2024, must file initial beneficial ownership reports within 90 days of their formation date.
• Reportable entities formed between September 3, 2024, through September 24, 2024, have until January 13, 2025, to file initial beneficial ownership reports.
• Reportable entities formed between September 25, 2024, and December 2, 2024, must file initial beneficial ownership reports within 90 days of their formation date.
• Reportable entities formed between December 3, 2024, and December 23, 2024, an additional 21 days from their original filing deadline has been granted.
• Reportable entities formed between December 24, 2024, and December 31, 2024, must file initial beneficial ownership reports within 90 days of their formation date.
• Reportable entities formed after January 1, 2025, must file initial beneficial ownership reports within 30 days of their formation date.

Special Provisions for Disaster Relief

Entities qualifying for disaster relief may have deadlines extending beyond January 13, 2025. These companies should follow the later of the available deadlines to ensure compliance with the reporting requirements. The extended deadlines consider the difficulties faced by businesses impacted by natural disasters, providing them with the flexibility needed to meet their filing obligations.

Exemptions

In accordance with the alert titled “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)”, certain plaintiffs, including Isaac Winkles and related reporting companies, the National Small Business Association, and its members (as of March 1, 2024), are currently exempt from reporting their BOI to FinCEN. This exemption remains in effect pending further legal developments. This exemption is very limited in scope and should only be relied upon by the affected plaintiffs.

Conclusion

Staying abreast of these updates is crucial for reportable entities to ensure compliance with the BOI reporting requirements. The extensions provided by the Department of the Treasury offer a bit of relief and additional time to navigate the evolving legal environment, which will likely be challenged further as the CTA remains a significant area of contention. Responsible parties for reportable entities should regularly monitor further changes and promptly plan for compliance in response.

We recommend consulting with legal counsel and reviewing the information on FinCEN’s BOI homepage to become familiar with the reporting requirements and penalty exposure for noncompliance.

Sources

https://fincen.gov/boi