Updated: January 7, 2025 – On December 26, 2024, the Fifth Circuit Court of Appeals vacated its motion to stay the BOI reporting injunction, effectively making compliance voluntary. The Department of Justice filed an emergency application with the Supreme Court on December 31, 2024, seeking to lift the injunction. Justice Alito has set a January 10, 2025, deadline for the plaintiffs to respond, leaving the injunction in place for now.
BOI Reporting Deadline Extended
The Beneficial Ownership Information (BOI) reporting requirement under the Corporate Transparency Act (CTA) has regained enforcement status following a recent legal ruling. The Fifth Circuit Court of Appeals reinstated the rule, lifting a previous injunction that had temporarily halted its implementation. To accommodate businesses adjusting to this change, the Financial Crimes Enforcement Network (FinCEN) extended reporting deadlines. To help clients, prospects, and others, WhippleWood CPAs has summarized the key details below.
Court Decision
On December 23, 2024, the Fifth Circuit Court of Appeals lifted the nationwide injunction that had temporarily halted the enforcement of the CTA and its BOI reporting requirements. The injunction, issued by the U.S. District Court for the Eastern District of Texas on December 3, 2024, stemmed from constitutional concerns raised in the case Texas Top Cop Shop, Inc. v. Garland.
In its ruling, the Fifth Circuit stated that the federal government has a strong likelihood of successfully defending the CTA’s constitutionality. The court emphasized Congress’s broad authority under the Commerce Clause to regulate economic activity and weighed the public interest, noting, “When balancing this harm against the public’s urgent interest in combatting financial crime and protecting our country’s national security, equity favors a stay.”
However, the case is far from over. According to the National Law Review, opponents of the regulation may seek further relief by appealing to the U.S. Supreme Court or requesting additional review from the Fifth Circuit.
Extended Deadlines
To help the millions of reporting companies still working to meet their obligations under the reinstated requirements, FinCEN has announced updated deadlines:
- Entities created or registered before January 1, 2024: These businesses now have until January 13, 2025 to file their initial BOI reports (previously due January 1, 2025).
- Entities created or registered between September 4, 2024, and December 23, 2024: Businesses with deadlines falling between December 3 and December 23, 2024, also have until January 13, 2025 to file.
- Entities created or registered between December 3, 2024, and December 23, 2024: These companies have an additional 21 days from their original filing deadline.
- Entities created or registered on or after January 1, 2025: Newly created entities must file within 30 days of receiving notice of their creation or registration.
- Disaster Relief Exemptions: Companies qualifying for disaster relief may have extended deadlines beyond January 13, 2025, based on applicable relief provisions.
BOI Requirements
BOI reporting requires most U.S. businesses, including corporations, LLCs, and similar entities, to disclose detailed information about their beneficial owners — individuals who own 25% or more of the business or exercise substantial control over its operations.
Businesses must report key information for each beneficial owner, including the full legal name, date of birth, residential address, and a government-issued ID number, such as a passport or driver’s license. These reports are submitted through FinCEN’s secure e-filing system, and businesses are required to update their filings within 30 days of any changes to ownership or control.
Not all entities are subject to BOI reporting. Exemptions include publicly traded companies, nonprofits, and large operating companies that meet specific thresholds for employees and revenue. However, the majority of small and mid-sized businesses will need to comply.
Noncompliance carries consequences. Civil fines can reach up to $591 per day, and criminal penalties include fines of up to $10,000 and imprisonment for up to two years. For businesses managing multiple entities, separate reports must be filed for each to avoid penalties.
Next Steps for Reporting Companies
- Prepare for Compliance: Companies will want to begin collecting and organizing the necessary information to meet their BOI reporting obligations.
- Stay Informed: Given the ongoing litigation, businesses will want to remain updated on any changes to the reporting requirements or deadlines. Monitoring announcements from FinCEN will help ensure timely compliance.
- Seek Professional Guidance: Legal and financial professionals can provide valuable insights into the specific obligations of reporting companies and help businesses navigate the nuances of the CTA.
Contact Us
FinCEN’s extended deadlines provide a narrow window for preparation. By staying proactive and informed, reporting companies can adapt to the reinstated BOI reporting requirements and avoid potential penalties. If you have questions about the information outlined above or need assistance with another tax or accounting issue, WhippleWood CPAs can help. For additional information call 303-989-7600 or click here to contact us. We look forward to speaking with you soon.