Beneficial Ownership Information: Latest Legal Developments

Beneficial Ownership Information Reports: Navigating the Latest Legal Developments

As we enter 2025, small business owners face continued pressure to comply with the Beneficial Ownership Information Reporting (BOIR) requirements established under the Corporate Transparency Act (CTA). With recent legal developments and evolving enforcement timelines, understanding your reporting obligations is more important than ever. Let’s break down the latest updates and what they mean for your business.

What Is the Corporate Transparency Act?

The CTA plays a vital role in protecting the U.S. and international financial systems from illicit finance threats like terrorist financing, drug trafficking, and money laundering. By requiring certain entities to file Beneficial Ownership Information Reports with the Financial Crimes Enforcement Network (FinCEN), the CTA levels the playing field for tens of millions of law-abiding small businesses across the United States and makes it harder for bad actors to exploit loopholes to gain an unfair advantage.

The reporting requirements officially took effect on January 1, 2024, with non-compliance potentially resulting in hefty fines and even criminal penalties. However, recent court rulings have significantly impacted enforcement.

Latest Legal Developments

The legal landscape for BOIR requirements has been anything but stable. Recent rulings have led to a temporary halt in enforcement, leaving many business owners unsure of their obligations.

Texas Top Cop Shop, Inc. v. Garland

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction in the case Texas Top Cop Shop, Inc., et al. v. Garland, et al. This order temporarily halted the enforcement of BOIR requirements. While this is one of several cases challenging the CTA, other district courts, including those in Virginia and Oregon, have ruled in favor of the Department of the Treasury, finding the CTA constitutional.

Appeals and Reversals

On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit granted a stay of the district court’s preliminary injunction, temporarily allowing enforcement of the BOIR requirements to proceed. However, just three days later, on December 26, 2024, a different panel of the Fifth Circuit vacated the stay, reinstating the district court’s injunction.

As a result, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability for failing to do so while the injunction remains in force. However, reporting companies may voluntarily submit their reports during this time.

What Does This Mean for Business Owners?

1. No Current Filing Requirement: Reporting companies are not obligated to file BOIR while the injunction is in place. However, voluntary submissions are still accepted.
2. Be Prepared: The Department of Justice has filed an appeal, and the legal      situation could change quickly. It’s essential to stay informed and prepared to comply if the injunction is lifted.
3. Deadlines Could Shift Again: FinCEN has already extended deadlines in light of      recent rulings. Further extensions or changes may occur as the legal proceedings continue.

How to Stay Ahead

• Monitor Updates: FinCEN regularly updates its website with the latest information on BOIR requirements. Their current guidance states: "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."
• Prepare  Documentation: Even though filing is not required at this time, organizing your beneficial ownership information now will save you time and stress later if enforcement resumes.
• Use Trusted Resources: FinCEN provides guidance to help businesses understand their obligations. 

Take Action Now

Navigating the complexities of BOIR can be daunting, especially with legal uncertainty. If you haven’t already, now is the time to review your compliance strategy. Email us at contact@dolevlaw.com to request our free DIY guide and ensure your business is prepared for any changes.

One Final Thought

If you’re feeling a bit dizzy from all the legal whiplash, you’re not alone! The best way to stay grounded is to keep an eye on FinCEN’s website for updates, as things can (and do) change frequently. Consider it your legal weather report—check often, stay prepared, and avoid getting caught in the storm!

Beneficial Ownership Information Reporting | FinCEN.gov

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Disclaimer

This blog is for informational purposes only and does not constitute legal, financial, or tax advice. For specific advice tailored to your business, please consult a qualified professional.