BOIR Background
On January 1, 2024, the Corporate Transparency Act (CTA) went into effect, requiring nearly all entities doing business in the United States to report information on their beneficial owners in an effort to prevent corruption and money laundering. This report, known as a Beneficial Ownership Information Report (BOIR), is filed online through the Financial Crimes Enforcement Network (FinCEN) website and includes the name, date of birth, street address, and I.D. of the beneficial owners of the company.
Previously, BOIR filings were required to be submitted to FinCEN:
· by January 1, 2025, for Reporting Companies formed prior to January 1, 2024;
· within 90 calendar days following the formation of all Reporting Companies formed on or after January 1, 2024, but before January 1, 2025; and
· within 30 calendar days following the formation of all Reporting Companies formed on or after January 1, 2025.
Recent Change to BOIR Filings - Texas Top Cop Shop, Inc., et al. v. Garland, et al.
However, on December 3, 2024, the U.S. District Court for the Eastern District of Texas redefined the landscape of this reporting requirement, at least for now. In the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.), a nationwide preliminary injunction was issued (1) enjoining enforcement of the Corporate Transparency Act (CTA) and its BOIR filing requirement, and (2) staying all deadlines to comply with the CTA’s reporting requirements.
The Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024. Shortly thereafter, the Financial Crimes Enforcement Network (FinCEN), which is tasked to enforce the BOIR requirements, provided the following alert:
“In light of a recent federal court order, 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.”
What This Means for Your Business
Ultimately, this means reporting companies are not currently required to file a BOIR with FinCEN and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect. While this litigation is ongoing, FinCEN will comply with the order issued by the U.S. District Court for the Eastern District of Texas for as long as it remains in effect.
For businesses that have already filed a BOIR with FinCEN, you are currently in good standing and no further action is required in light of this nationwide injunction. For businesses that have not yet filed a BOIR, a close eye should be kept on developments in this case as the appeal process evolves. In the meantime, there are two ways companies can choose to handle the situation:
i. Take the cautious approach and report by the January 1, 2025, deadline (this deadline applies to all reporting companies formed before January 1, 2024), or
ii. Wait and see how the case unfolds. Given the issuance of the FinCEN statement, it is likely permissible to pause the BOIR filing for now and wait and see how the case evolves. Further, we believe that if the injunction is lifted, reporting companies will be granted a reasonable time to comply. However, it is uncertain how long that timeframe to comply would be.
For more information regarding BOIR filing compliance in light of the recent decision in Texas Top Cop Shop, Inc., et al. v. Garland, et al., please contact Jake Keller at Fonss & Estigarribia LLP at jbk@fellplaw.com and (858)-746-6488.
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