BOI Filing is back after Injunction lifted by the Appeals court; FinCEN Extends BOI Deadlines for Most Companies to Jan 13, 2025

By Neeraj Bhatia-

On December 23, 2024, The Fifth Circuit Court of Appeals lifted the injunction placed on Beneficial Ownership Information (BOI) reporting by a District court on December 3, 2024.

Following this ruling that reinstated the reporting requirement, the Financial Crimes Enforcement Network (FinCEN) extended the deadline for most reporting companies to submit beneficial ownership information (BOI) reports to January 13, 2025.

On December 3, 2024, a federal district court ruled that the Corporate Transparency Act (CTA) was likely unconstitutional and temporarily halted its enforcement, including the Beneficial Ownership Information (BOI) reporting requirements. This decision prohibited the Financial Crimes Enforcement Network (FinCEN) from enforcing BOI filing obligations during the case.

The Department of Justice (DOJ) appealed the ruling on December 5, 2024. On December 13, 2024, the Attorney General filed an emergency motion to stay the injunction. On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit granted the motion, lifting the district court’s preliminary injunction in the case Texas Top Cop Shop, Inc. v. Garland. This allowed FinCEN to resume enforcing the BOI reporting requirements while the Department of the Treasury’s appeal continues.

As a result, reporting companies are once again required to file beneficial ownership information with FinCEN, unless an exemption applies as stated in the last section below. However, in recognition of the time lost due to the preliminary injunction, the Department of the Treasury has extended the reporting deadline as follows:

Reporting companies created or registered before January 1, 2024, now have until January 13, 2025, to file their initial beneficial ownership information reports with FinCEN (this is an extension from the original deadline of January 1, 2025).

  • Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)
  • Reporting companies created or registered in the United States on or after September 4, 2024, and with a filing deadline between December 3, 2024, and December 23, 2024, also have until January 13, 2025, to file their initial beneficial ownership reports.
  • Reporting companies created or registered in the United States between December 3, 2024, and December 23, 2024, will have an additional 21 days from their original filing deadline to submit their initial reports.
  • Reporting companies eligible for disaster relief may have extended deadlines beyond January 13, 2025. These companies should adhere to the later of the two applicable deadlines.
  • Reporting companies created or registered in the United States on or after January 1, 2025, have 30 days from the date they receive notice of their creation or registration to file their initial beneficial ownership information reports with FinCEN.

Who needs to file –

The following companies, called the “Reporting companies”, may be required to report:

Domestic reporting companies: These include corporations, LLCs, and other entities created by filing with a secretary of state in the US.

Foreign reporting companies: These include entities registered to do business in the US by filing with a secretary of state.

Information needed in the BOI Report:

Information about the Reporting Company:

  • Full legal name of each beneficial owner.
  • Any trade name or DBA name
  • Current US address.
  • State/ Jurisdiction of formation
  • Employer’s Identification number of the entity (or Tax Identification number of the foreign reporting company)

Information about the Beneficial Owner(s)

Beneficial owner is any individual who Directly or indirectly controls the business of Reporting company or who owns or controls at least 25% of that business’s ownership interests. The following information is required to be reported of each beneficial owner:

  • Full legal name of each beneficial owner.
  • Date of birth.
  • Current residential address.
  • Unique identification number, Passport or Driver’s license number along with copy of such unexpired document

Information about the Company applicants

Company applicants are the persons who directly filed the document that created a domestic reporting company, or the individual who directly filed the document that first registered a foreign reporting company. These also include individuals who were primarily responsible for directing or controlling the filing of the creation or first registration document.

A reporting company is required to report its company applicants if it is either a domestic reporting company created on or after January 1, 2024, or is a foreign reporting company first registered to do business in the United States on or after January 1, 2024. Each reporting company that is required to report company applicants will have to identify and report to FinCEN at least one company applicant, and at most two applicants who are individuals.

The information required to report in respect of the Company applicants is the same as that of required of Beneficial Owners.

Penalties for non-compliance:

The willful failure to report complete or updated BOI report to FinCEN , or the willfully providing false or fraudulent BOI report may result in a civil or criminal penalties as follows:

  • Civil penalties up to $500 per day.
  • Senior officers of an entity may be held accountable for that failure.
  • Up to 2 years imprisonment and/ or fine up to $10,000.

Exemptions:

The Reporting Rule exempts twenty-three (23) specific types of entities from the reporting requirements. These include publicly traded companies, nonprofits, and certain large operating companies, Banks and other financial institutions, Investment company, investment or VC Fund advisers, Insurance companies, State-licensed insurance producers, accounting firms, certain utility companies, and inactive entities, among others.

Additionally Large operating companies are also entitled for this exemption. For this purpose, an entity qualifies as a Large operating company if the entity employs more than 20 full-time employees in the United States, has an operating presence at a physical office in the US, has a Gross receipts or sales of more than $ 5 million from sources within the US, as reported on its Federal Income Tax return.

Also, as outlined in the  “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)”, plaintiffs in National Small Business United v. Yellen—including Isaac Winkles, companies where Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and its members (as of March 1, 2024)—are not currently required to report their beneficial ownership information to FinCEN. In this different case, a federal district court in the Northern District of Alabama, , entered a final declaratory judgment, concluding that the Corporate Transparency Act (CTA) exceeds the Constitution’s limits on Congress’s power and enjoining the Department of the Treasury and FinCEN from enforcing the Corporate Transparency Act against the plaintiffs. The Justice Department, on behalf of the Department of the Treasury, filed a Notice of Appeal on March 11, 2024. While this litigation is ongoing, FinCEN will continue to implement the Corporate Transparency Act. As a result, that other than the particular individuals and entities subject to the court’s injunction (Isaac Winkles, reporting companies), all other reporting companies are still required to comply with the law and file beneficial ownership reports as provided in FinCEN’s regulations.

 [Neeraj Bhatia is a licensed attorney in California & CPA in California, New York and Colorado and a CA in India. He also has a LL.M. in International Taxation from the US, Costs and Works (Management) Accountancy, and a Bachelor (Honors) degree in Commerce from India. During his academic years he has received several awards and scholarships for being the top ranker nationally.]