On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit lifted a nationwide preliminary injunction that had temporarily halted the enforcement of the Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) reporting requirements. This decision reinstates the obligation for certain business entities, known as “reporting companies,” to disclose their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). Let’s take a closer look.
Background on the Corporate Transparency Act
The CTA, effective January 1, 2024, aims to combat financial crimes by requiring reporting companies to submit BOI to FinCEN.
A reporting company is generally defined as a corporation, limited liability company, or similar entity created by filing a document with a secretary of state or similar office.
Certain entities, such as large operating companies and regulated entities, are exempt from this requirement.
Recent Legal Developments
Earlier in December 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction, pausing the enforcement of the CTA’s reporting requirements nationwide.
The Department of Justice appealed this decision, and the Fifth Circuit subsequently stayed the injunction, allowing the CTA’s provisions to take effect.
Updated Reporting Deadlines
In light of these legal proceedings, FinCEN has adjusted the reporting deadlines. Please note the following:
- Existing reporting companies: Entities created or registered before January 1, 2024, now have until January 13, 2025, to file their initial BOI reports.
- New reporting companies: Entities formed or registered between September 4, 2024, and December 3, 2024, with original deadlines between December 3 and December 23, 2024, now have until January 13, 2025, to submit their BOI reports. Entities formed or registered between December 3, 2024, and December 23, 2024, have an additional 21 days beyond their original 90-day deadline to file their BOI reports.
- Future reporting companies: Entities created or registered on or after January 1, 2025, will have 30 days from their formation or registration date to file their initial BOI reports.
Compliance Recommendations
Given the reinstatement of the CTA’s reporting requirements, reporting companies should promptly prepare to meet their BOI reporting obligations by the specified deadlines to avoid potential civil and criminal penalties.
It’s advisable to consult with legal professionals to ensure compliance with the CTA and to stay informed about any further legal developments that may impact these obligations.
Contact The McWilliams Law Group for Help
When you are ready to open a new business or take your current business to the next level, the lawyers at The McWilliams Law Group are here to help. We can help ensure that your operations provide you with the tax and liability protections that best fit your short- and long-term plans. Our attorneys work closely with business owners throughout Washington and California, providing individualized and strategic advice to help their businesses run smoothly. Contact us now and get the skilled business advice that you deserve.
