Listen to this articleCorporations and limited liability companies (LLCs) must file beneficial ownership information with the federal government by Jan. 13, after an injunction was lifted by a court ruling this week.
The U.S. Court of Appeals for the Fifth Circuit lifted the nationwide preliminary injunction that had temporarily suspended enforcement of the reporting requirements which was mandated by the Corporate Transparency Act (CTA) enacted by Congress in 2021 to curb illicit finance.
The CTA required that all companies or LLCs “created in the United States by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe or a foreign company registered to do business in any U.S. state or Indian tribe” before Jan. 1, 2024 file beneficial ownership information (BOI) with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, by Jan. 1, 2025.
However, the initial deadline of Jan. 1 was extended until Jan. 13 by FinCEN after the pause from the preliminary injunction was lifted.
If a company is created or registered in 2024, it must report BOI within 90 days after receiving actual or public notice that the company’s creation or registration is effective. For companies created or registered on or after Jan. 1, 2025, they must file BOI within 30 days after receiving actual or public notice that its creation or registration is effective. In addition, any updates or corrections to beneficial ownership information previously filed with FinCEN must be submitted within 30 days.
Twenty-three types of entities are exempt from beneficial ownership information reporting requirements, including publicly traded companies, nonprofits and certain large operating companies, according to FinCEN.
The original injunction that temporarily halted the BOI reporting requirement, which was issued on Dec. 3 by the U.S. District Court for the Eastern District of Texas has been stayed while the case proceeds, according to a statement issued by accounting and advisory firm Grassi.
The three-judge appeals panel that lifted the injunction this week determined that the Department of Justice “made a strong showing that it is likely to succeed on the merits in defending CTA’s constitutionality,” and that the reporting requirement falls within Congress’ authority under the Commerce Clause to regulate economic activity affecting interstate commerce. And though Grassi suggests there will be an appeal to a higher court prior to Jan. 13, the advisory firm recommends that businesses proceed with completing their BOI reporting requirements.
More information on who must file and how can be found on the FinCEN website at www.fincen.gov/boi.