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February 20, 2025
Yes, It’s True, Beneficial Ownership Information Reporting Is Back On
In a plot twist worthy of daytime television, beneficial ownership information (BOI) reporting under the Corporate Transparency Act (CTA) has made a dramatic comeback. After being enjoined for months, the second and final nationwide injunction has been lifted, clearing the way for the Financial Crimes Enforcement Network (FinCEN) to enforce the law. However, the story doesn’t end there – FinCEN has left us with a cliffhanger about future developments that will certainly keep viewers tuning in.
On February 18, 2025, a federal judge in Texas voluntarily lifted its nationwide preliminary injunction while the U.S. Department of Justice’s appeal is pending. Following the court’s order, FinCEN briefly extended the CTA reporting deadline for most companies until March 21, 2025. FinCEN also provided a teaser by indicating that, in keeping with Treasury’s commitment to reducing the regulatory burden on businesses, it will assess its options to further modify deadlines, particularly in regard to lower-risk entities.
Meanwhile, on February 10, 2025, the U.S. House of Representatives voted unanimously to push the CTA reporting deadline to January 1, 2026. The bill is now pending before the Senate.
As the clock ticks down to the new deadline, what new exciting developments will unfold? Stay tuned for more updates on this thrilling saga, but for now, the CTA is back.
January 24, 2025
Oh BOI, the Supreme Court Invalidates One Nationwide Injunction but Another One Remains in Effect
In a dramatic and dizzying turn of events, the Supreme Court on January 23, 2025 reinstated the government’s power to enforce the Corporate Transparency Act (CTA), overturning a previous block by the Fifth Circuit Court of Appeals. You might think this would allow the federal government to enforce the law while courts consider the matter further, but that is not the case. A separate nationwide injunction from a different federal judge in Texas remains in effect.
Backstory on Beneficial Ownership Information (BOI) Reporting
The CTA, enacted in 2021, aims to combat financial crimes by requiring companies to report certain information about their beneficial owners to the federal government. This is known as BOI reporting. The law faced immediate opposition from business groups, leading to a legal battle that saw a federal judge in Texas issue a nationwide injunction on December 3, 2024, halting its enforcement. This was followed by the Fifth Circuit lifting the injunction and shortly thereafter reinstating it, all before the original filing deadline of December 31, 2024.
In late December, the government appealed to the Supreme Court, arguing that the injunction impeded efforts to prevent financial crimes and protect national security. The Supreme Court’s order overturned the injunction, but only in the case before it. The Supreme Court did not address the Smith case, a separate case where a different federal judge in Texas issued a separate nationwide injunction. The injunction in the Smith case remains in effect. Thus, BOI reporting under the CTA is on hold, at least for the time being.
On January 24, 2025, FinCEN, the federal agency tasked with enforcement of the CTA, issued guidance confirming that “reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
As the legal battle continues, companies are not currently required to comply with the CTA’s reporting mandates. Stay tuned for further updates.
Contact Us
Please reach out to Withum’s Tax Services Team if you have any questions about your BOI reporting obligation.
