January 1, 2025—the original deadline that most small businesses had to file a Beneficial Ownership Information (BOI) report with the U.S Treasury’s Financial Crimes Enforcement Network—has come and gone.
Ordinarily, missing a filing deadline with a government agency can lead to penalties and investigations.
However, the requirement to file a BOI report is in a state of limbo, thanks to a confusing myriad of legal proceedings in the federal courts.
As of February 2025, reporting companies are currently not required to file a BOI report and will not be subject to liability if they fail to do so while legal challenges play out. However, companies and their owners should be aware that the filing requirement could be reinstated at any time with little or no warning or grace period, and they may have to comply quickly with reporting obligations.
What is the Corporate Transparency Act?
The ownership of many corporations and other entities—particularly publicly traded companies—has been subject to regulation for decades.
Any business that has opened a bank account in the past decade knows that banks are required to collect certain information concerning the owners and authorized signatories on those accounts.
Most states require information to be reported periodically concerning the founders, owners, and officers/managers of entities organized under their jurisdiction.
If a business requires any type of professional licensure, the personal information of the professionals will generally be disclosed on the license application.
While this information is typically gathered by state agencies, it may also be (and often is) shared with and accessible to various agencies of the United States government.
Enter the Corporate Transparency Act.
On January 1, 2021, Congress enacted the Anti-Money Laundering Act of 2020, which included the Corporate Transparency Act (the “CTA”). The stated purpose of the CTA was to reduce money laundering by establishing standards for reporting beneficial ownership information (“BOI”) of corporations, limited liability companies, trusts, and similar entities.
What did the Corporate Transparency Act Require?
As enacted, the CTA required “reporting companies” to submit BOI reports to FinCEN: (i) by January 1, 2025, in the case of entities in existence prior to 2024, (ii) within 90 days after formation, in the case of entities formed during the 2024 calendar year, and (iii) within 30 days after formation, for entities formed in 2025 and beyond.
A “reporting company” under the CTA is any corporation, limited liability company, or other similar entity that is (i) created by the filing of a document with a secretary of state or a similar governmental office under applicable law; or (ii) formed under the law of a foreign country and registered to do business in the United States by the filing of a document with a secretary of state or a similar office.
So, is every entity that is formed in, or that does business in, the United States required to file a BOI report?
This is where those existing regimes of government regulation noted above provide some relief. The CTA provides 23 exemptions from reporting—mainly to carve out entities that are by their nature subject to existing regulatory reporting regimes, such as entities registered with the Securities and Exchange Commission and/or Commodity Futures Trading Commission, as well as non-profit entities.
Perhaps the most important exemption for private businesses is the “Large Operating Company” exemption. The CTA exempts from the BOI filing requirements any privately-held entity that: (i) employs more than 20 employees on a full-time basis in the United States, (ii) has filed a federal income tax return for the previous year demonstrating more than $5,000,000 in gross receipts or sales, and (iii) operates out of a physical office within the United States.
Who Is Required to File and What Must be Filed?
If a U.S. business entity has less than 20 full-time employees or less than $5,000,000 in gross receipts during the prior year, it is generally subject to the BOI reporting requirement unless another exemption applies.
These “reporting companies” must file a BOI report with FinCEN containing the following information:
- the company’s full legal name;
- any trade name(s) registered by the company;
- the U.S. address of the company (current as of the date on which the BOI Report is filed);
- the jurisdiction of formation or registration of the company;
- the company’s federal tax identification number;
- personal information concerning each beneficial owner of the company controlling 25% or more of the stock, or other persons controlling decision-making authority (e.g. many senior managers, directors, and officers); and
- information on persons who assisted in creating the entity (a “Company applicant”)
Failing to comply with the BOI requirements can lead to civil penalties, including a fine of up to $500 for each day of the violation (but not more than $10,000 in the aggregate). In addition, willful violators can face criminal liability of up to two years imprisonment.
So, Why is this Article Titled “Injunction Junction”?
The saga of the CTA’s legal challenges—and it truly is a saga already—is unfolding in real time.
Every saga needs a hero, and Texas Top Cop Shop, Inc. is the unlikely protagonist (assuming you don’t like government regulation) in this story.
In May 2024, Texas Top Cop Shop Inc., together with additional plaintiffs, filed a lawsuit in Texas federal court alleging that the CTA exceeds Congress’ constitutional power to regulate interstate and foreign commerce and also infringes on First Amendment protections. The plaintiffs sought a nationwide injunction against the CTA’s enforcement.
On December 3, 2024—less than 30 days before the original filing deadline to file a BOI report for entities in existence prior to 2024—the U.S. District Court for the Eastern District of Texas granted the injunction and stayed enforcement of the CTA nationwide.
On December 23, 2024, a panel from the Fifth Circuit Court of Appeals granted the government’s appeal and reinstated the filing requirement.
On December 26th, a different Fifth Circuit panel reversed its prior reversal, reinstating the injunction.
On January 23, 2025, the U.S. Supreme Court granted the government’s appeal of the Fifth Circuit ruling, reinstating the filing requirement and lifting the injunction.
But if the Supreme Court lifted the injunction, why are we telling you that there is presently no filing requirement to comply with the CTA?
On January 7, 2025, a different Texas federal judge in a different case issued a separate nationwide injunction against CTA enforcement. Because the U.S. Supreme Court’s decision on January 23rd only applied to the injunction issued in the Texas Top Cop Shop case, this means that the January 7th injunction in the separate Texas case is still in place.
FinCEN’s website presently states: “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.”
I’m A Business Owner. What Should I Do?
With all of this said, there is no filing fee involved for BOI reports, and the information being reported is largely already in the hands of one or more agencies of the state government, the federal government, or both.
In the District of Columbia, for example, companies are already required to report beneficial ownership information of anyone holding or controlling 10% or more of a DC entity.
To avoid last-minute rushes and potentially missed filings if or when the current legal challenges are resolved, entities and their owners should strongly consider voluntarily filing BOI reports now. The filing requirement could be reinstated with little notice and little leeway before a new deadline.
If you are a business owner who would like assistance with your BOI filing, or if you have any other business law needs, contact Tim Canney at (301) 656-1177 x331 or tcanney@bulmandunie.com.
