On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit lifted a nationwide injunction that had previously halted the enforcement of the Corporate Transparency Act (CTA). This decision reinstates the requirement for businesses to file Beneficial Ownership Information (BOI) reports with the Financial Crimes Enforcement Network (FinCEN).
Background on the Corporate Transparency Act
The CTA mandates that corporations, limited liability companies, and similar entities disclose information about their beneficial owners to FinCEN. This initiative aims to combat financial crimes such as money laundering and tax evasion by increasing transparency in business ownership.
Legal Developments Leading to the Reinstatement
Earlier this month, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction, temporarily suspending the BOI reporting requirements nationwide. The federal government appealed this decision, and the Fifth Circuit granted a stay of the injunction, allowing the CTA’s provisions to take effect once more.
How can we meet the new deadline requirements?
Feel free to email us at entitywise@gmail.com or call us at 801-784-3234. We’re here to help you determine whether you need to file and can handle your BOI filing for just $50.00 per entity.
Updated Reporting Deadlines
In light of the Fifth Circuit’s ruling, FinCEN has adjusted the reporting deadlines to accommodate businesses affected by the injunction
- Existing Entities: Businesses formed or registered before January 1, 2024, now have until January 13, 2025, to file their initial BOI reports.
- New Entities: Businesses formed or registered on or after January 1, 2025, are required to file their initial BOI reports within 30 days of formation or registration.
The Beneficial Ownership Information (BOI) reporting requirements apply to most businesses formed or registered in the United States. Here’s a breakdown of who has to file and who is exempt:
Entities Required to File BOI
The requirement primarily applies to reporting companies:
- Domestic Reporting Companies:
- Corporations, limited liability companies (LLCs), and other similar entities created by filing a document with a state or tribal authority.
- Foreign Reporting Companies:
- Entities formed under the laws of a foreign country but registered to do business in the United States.
Entities Exempt from BOI Filing
Some entities are exempt due to their nature, size, or existing regulatory oversight. The exemptions include:
- Large Operating Companies:
- Employ more than 20 full-time employees in the U.S.
- Generate over $5 million in gross receipts or sales.
- Have a physical office in the U.S.
- Publicly Traded Companies:
- Listed on a U.S. stock exchange and already subject to SEC reporting requirements.
- Highly Regulated Entities:
- Banks, credit unions, broker-dealers, investment companies, insurance companies, and public utilities.
- Governmental Entities:
- Federal, state, or local government entities and their subsidiaries.
- Inactive Entities (subject to strict conditions):
- Incorporated before January 1, 2020.
- No active business.
- No foreign or domestic ownership.
- No substantial assets.
- Subsidiaries of Exempt Entities:
- Entities wholly owned by an exempt entity.
- Certain Tax-Exempt Organizations:
- Nonprofits and other tax-exempt organizations under specific IRS designations.
Who Qualifies as a Beneficial Owner?
If your business is subject to BOI reporting, you must disclose information about beneficial owners, defined as individuals who:
- Own 25% or more of the company’s equity, OR
- Exercise substantial control over the company (e.g., executive officers, decision-makers).
Key Considerations
- Newly Formed Entities (starting January 1, 2024): Must file within 30 days of formation.
- Existing Entities (formed before January 1, 2024): Have until January 13, 2025, to file their initial report.
Non-compliance can result in fines or criminal penalties, so businesses should evaluate their obligations carefully. If you’re uncertain, consulting a legal or compliance expert is highly recommended.