BOI Update
December 16, 2024
I received countless inquiries from clients during the year seeking my advice regarding filing the Beneficial Ownership Information Report that is required by the Corporate Transparency Act. Frustratingly, my answer so far has been “hold off.” I realize this was not the definitive answer they were seeking. In fact, this advice is contrary to the common sentiment of the media which has incessantly used every platform at its disposal to spread its clarion call of “FILE YOUR BOI REPORT NOW OR DOOM AWAITS! (and we will gladly help you for a small fee, of course).” I want to thank my clients for their patience, and I believe the following excerpt from the FinCEN website has made their wait fruitful:
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.
Given this new turn of events, filing a BOI report is currently 100% voluntary. Since this is the case, the choice of filing is solely at your discretion. However, if you choose to file, my primary concern is that the BOI database becomes yet another treasure trove of personal data waiting to be hacked. Please take this into consideration when making your decision.
It is important to note that the federal court ruling may be overturned and that filing a BOI may once again become mandatory at some point in the future. We will attempt to timely post any future developments here, but the most up-to-date information can be found directly on the BOI filing portal page at https://www.fincen.gov/boi
For those who would like greater detail on the current legal landscape regarding the BOI, this excerpt is also from the FINCEN website:
On Tuesday, December 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.), a federal district court in the Eastern District of Texas, Sherman Division, issued an order granting a nationwide preliminary injunction that: (1) enjoins the CTA, including enforcement of that statute and regulations implementing its beneficial ownership information reporting requirements, and, specifically, (2) stays 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.
Texas Top Cop Shop is only one of several cases in which plaintiffs have challenged the CTA that are pending before courts around the country. Several district courts have denied requests to enjoin the CTA, ruling in favor of the Department of the Treasury. The government continues to believe—consistent with the conclusions of the U.S. District Courts for the Eastern District of Virginia and the District of Oregon—that the CTA is constitutional.
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. Therefore, reporting companies are not currently required to file their beneficial ownership information with FinCEN and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect. Nevertheless, reporting companies may continue to voluntarily submit beneficial ownership information reports.
