Important Update on BOI Reporting Requirements!

After numerous delays, the federal court has lifted the injunction that halted the enforcement of Beneficial Ownership Information (BOI) reporting requirements.

The new deadline for reporting is now March 21, 2025.

We will provide further updates if there are any other delays or deadlines that follow.

On December 23, 2024, the 5th Circuit Court of Appeals reinstated the requirement for businesses to file the Beneficial Ownership Information (BOI) report.

12/4/24 – A federal district court, finding that the Corporate Transparency Act (CTA) is likely unconstitutional, issued an order Tuesday prohibiting the enforcement of the CTA and the beneficial ownership information (BOI) reporting rule in the CTA’s accompanying regulations.

The injunction, which applies nationally, was issued in Texas Top Cop Shop, Inc. vs. Garland, No. 4:24-CV-478 (E.D. Texas 12/3/24).

Under the injunction, the CTA and the BOI reporting rule cannot be enforced, and reporting companies need not comply with the CTA’s Jan. 1, 2025, BOI reporting deadline pending a further order of the court.

Understanding Beneficial Ownership Information Reporting and Upcoming Deadlines

As the deadline for Beneficial Ownership Information (BOI) reporting approaches, it’s crucial for businesses to understand their obligations under the Corporate Transparency Act (CTA) enacted in 2021. The Financial Crimes Enforcement Network (FinCEN) has set forth specific requirements to enhance transparency and combat illicit activities such as money laundering and terrorism financing.

Penalties: CURRENTLY THERE ARE NO PENALTIES BEING ENFORCED FOR NON-COMPLIANCE WITH THE 3/21 DEADLINE

What is Beneficial Ownership Information Reporting?

Beneficial Ownership Information reporting mandates that certain types of corporations, limited liability companies (LLCs), and other similar entities disclose information about individuals who ultimately own or control them.

Who Needs to File?

A corporation, a limited liability company (LLC), or any business that was otherwise created in the United States by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe; or
A foreign company that was registered to do business in any U.S. state or Indian tribe by such a filing.

Who is exempt from filing BOI?

There are 23 specific categories of entities that are exempted from the BOI reporting requirements, including publicly traded companies, banks and credit unions, securities brokers/dealers, public accounting firms, tax-exempt entities and certain inactive entities, among others. Many of these entities are heavily regulated and thus already disclose their BOI to a government authority.

In addition, certain “large operating entities” are exempt from filing. To qualify for this exemption, the company must:

Employ more than 20 people in the U.S.;
Have reported gross revenue (or sales) of over $5M on the prior year’s tax return; and
Be physically present in the U.S.

A full list of reporting company exemptions and checklists to help companies determine if they are exempt from the reporting requirements can be found in FinCEN’sSmall Entity Compliance Guide.

What Information Must Be Reported?

A reporting company is required to provide basic information for itself and all beneficial owners.

For the reporting company, the required information includes legal name, trade names, address, jurisdiction of registration, and its taxpayer identification number.
For the beneficial owners, the required information includes name, date of birth, residential address, and an identifying number from an identification document such as a passport or driver’s license.

Deadlines for Reporting

Reporting companies created or registered before January 1, 2024 now have until January 13, 2025, to file.
Reporting companies created or registered in 2024 must file within 90 calendar days after receiving actual or public notice that their creation or registration is effective, whichever is earlier.
Reporting companies created or registered on or after January 1, 2025, must file within 30 calendar days after receiving actual or public notice that their creation or registration is effective.
Any updates or corrections to beneficial ownership information previously filed with FinCEN must be submitted within 30 days.
Note: as of November 2024, FinCEN has issued five Notices extending the filing deadlines to submit BOI reports for certain reporting companies in response to Hurricane Milton, Hurricane Helene, Hurricane Debby, Hurricane Beryl, and Hurricane Francine.

Steps to Ensure Compliance

Identify Beneficial Owners: Determine who qualifies as a beneficial owner under the CTA.
Gather Required Information: Collect the necessary details for each beneficial owner.
File the Report: Submit the BOI report through FinCEN’s e-filing system.

Risk of non-compliance

Penalties for willfully not complying with the BOI reporting requirement can result in criminal and civil penalties of $500 per day and up to $10,000 with up to two years of jail time.