Court Battles Rage: File Your FinCEN BOI Report Now or Wait?

The Corporate Transparency Act (CTA), which took effect on January 1, 2024, has faced significant legal challenges, resulting in delays and uncertainty around its enforcement. The CTA mandates that most small corporations and limited liability companies (LLCs) file a beneficial ownership information (BOI) report with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). This report, which identifies the individuals who control or own the entity, is not made public but is used by law enforcement to combat illegal activities like money laundering.

The original deadline for businesses in existence before 2024 to file their BOI reports was January 1, 2025, and those formed in 2024 had 90 days from formation to file. Filing is free and done online via FinCEN’s website. However, the process has been delayed due to a series of legal rulings.

A Texas federal court initially issued an injunction on December 3, 2024, blocking enforcement of the CTA, meaning businesses were not required to file during this period and would not face penalties. This injunction delayed the January 1, 2025, filing deadline. On December 23, 2024, the Fifth Circuit Court of Appeals overturned this ruling, reinstating the filing requirement, but later that day, FinCEN extended the filing deadline to January 13, 2025. A few days later, on December 26, 2024, the Fifth Circuit vacated its stay on the injunction, meaning businesses are currently not penalized for failing to file during the injunction.

As of December 2024, only around 9 million out of the estimated 32.6 million businesses required to file their BOI reports had done so, highlighting the slow progress in meeting this new requirement.

Other legal challenges are also underway. The Texas case is just one of 13 lawsuits filed against the CTA, with courts divided on its constitutionality. Some district courts have upheld the law, while others, like in Alabama, have declared it unconstitutional. The U.S. Supreme Court may ultimately need to decide on the constitutionality of the CTA.

Additionally, there are growing calls to delay the filing deadline by one year due to widespread confusion. Some bills have been introduced in Congress to repeal the CTA, and with the new Congress in 2025, further changes to the law are possible. The incoming Trump administration could also influence the law’s future, as it has shown a strong anti-regulatory stance.

For now, businesses that have already filed their BOI report do not need to take any action. If there are any changes that require an update to the report, businesses can wait until the injunction is lifted or further legal clarity is provided. While the injunction is in place, businesses are not required to file, but they can voluntarily submit their BOI reports through the FinCEN website.

If you haven’t filed your report yet, you’re not required to do so while the injunction is in effect, but it’s advisable to be prepared. If the injunction is lifted, you may face a tight deadline, so gather the necessary information now to avoid last-minute rushes.

Takeaways
The CTA requires most smaller corporations and LLCs to file a BOI report with FinCEN. The original deadline for businesses in existence before 2024 was January 1, 2025, but a Texas court issued an injunction delaying enforcement. While this injunction is in place, businesses will not be penalized for not filing their reports. However, as the situation evolves, it’s important to stay informed and be prepared to act quickly if new deadlines or regulations are introduced.