A Pause (Again) on Beneficial Ownership Informational Reporting

By Stanley Rose January 9, 2025

In a December 6, 2024, article we explained that an injunction created a pause in the filing requirements that are referred to commonly as either “Beneficial Ownership Reporting” (BOI) or by the name of the law that created the rules: the “Corporate Transparency Act” (CTA). Since then, some significant events have taken place, with the net result placing us right back where we started – with the BOI filing requirements being suspended, awaiting the results of a court case.

The latest battle relates to the “off and on again” status of an injunction that was the focus of our previous article. Readers unfamiliar with the BOI requirements may want to refer back to our earliest article on the topic, published in December 2022. This article assumed readers are somewhat familiar with the context, and will bring you up to speed on the latest whipsaw developments with the chronology provided below:

1. In 2021, Congress passed a law that requires most entities to file a form, and provide supporting documentation, with the Financial Crimes Enforcement Network (“FinCEN”) arm of the Treasury Department – a division of Treasury separate from the IRS. Although well-intentioned (unmasking terrorists/money launderers, etc.), the requirements were not well-received, primarily because they are so onerous and create a federal database of highly detailed personal information of entity owners – not only direct owners, but also indirect owners, sometime including those who are several “layers” removed from the underlying entity. Several lawsuits were initiated, challenging the legality of the new law.
2. On December 3, 2024, a U.S. District Court in Texas issued an injunction that suspended enforcement of the CTA nationwide – a stay that was to remain in effect while a specific lawsuit questioning the validity of the CTA played out.
3. On December 23, 2024, a panel of the 5^th Circuit’s U.S. Court of Appeals granted a stay of the stay – reversing the injunction. This move “turned on” the filing requirements again. For entities formed prior to 2024, this would mean that an original filing deadline of January 1, 2025, was back in force.
4. However, to accommodate the fact that many potential filers had relied on the stay provided by the short-lived injunction, FinCEN moved the filing deadline from January 1, 2025, to January 13, 2025.
5. On December 26, 2024, another panel of the U.S. Court of Appeals “turned off” the filing requirements again, by reinstating the December 3 injunction. FinCEN conceded that the injunction is back in effect and companies “are not currently required to file beneficial ownership information with FinCEN.”
6. On New Year’s Eve, the Department of Justice filed an “emergency” application with the U.S. Supreme Court, asking it to reverse the injunction. At the time this article is published, the court has not yet responded, and in fact, it does not have to respond. This means that the December 26 reinstatement of the injunction is still in place, and FinCEN continues to concede that, for now, the filings are not required.

That’s where we stand currently in this absurd ping-pong volley: right back where we were when the injunction was first issued. We do, however, seemingly have some insight into what FinCEN’s actions are likely to be if the requirements are “turned on” again, either as the result of a decision in the underlying lawsuit or more skirmishes with the “off again, on again” injunction. FinCEN acknowledges that BOI filing currently is voluntary, and the agency did provide a couple more weeks to file when the injunction was first listed. While not a given, this suggests that it is reasonable to assume that if the government prevails in its assertion that the CTA is valid, it will provide some period of time for those who relied on the injunction to file their forms without being deemed tardy relative to the January 1 or January 13, 2025 deadlines.

Finally, we’ll point out again that BNN is sharing news of developments like this because we know it is of interest to our clients and other readers, and we want you to be informed. However, we do not prepare or assist with BOI filings or determinations of the law’s applicability to particular fact patterns. We suggest that you consult with legal counsel before deciding on any course of action (or inaction) related to this injunction or BOI filing requirements in general.

For more information, please contact Stanley Rose or your BNN tax advisor at 800.244.7444.