On Dec. 26, 2024, in a surprise reversal, a second panel of the U.S. Court of Appeals for the Fifth Circuit reinstated a nationwide injunction that suspends enforcement of the BOI reporting obligations. The reporting requirements had been previously reinstated on December 23rd by an initial three-judge panel of the court. However, that order was reversed almost immediately by another panel in this more recent decision on Thursday.
The Beneficial Ownership Information (BOI) reporting rules contained in the Corporate Transparency Act (CTA) were effective beginning January 1, 2024. Most US companies in existence prior to 2024 were given a deadline of December 31, 2024, to comply with the law’s reporting requirements, and newly-formed companies were given a reporting deadline of 90 days after their formation. The rules are intended to assist the Financial Crimes Enforcement Network (FinCEN) of the Department of Treasury in investigating and prosecuting criminal activity. However, the requirements have been heavily criticized and litigated. On December 3rd, a federal district judge in Texas placed a nationwide injunction against compliance with the BOI rules. That injunction was later lifted by the Fifth Circuit on December 23rd, which reinstated the reporting requirements. Consequently, FinCEN also extended the filing deadline beyond December 31, citing the administrative uncertainty caused by temporary pause. However, on December 26th, the Fifth Circuit vacated its prior order and reinstated the injunction once again against the law’s enforcement.
Accordingly, for now, 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. Given the confusion and lack of any certainty over the law’s future, we recommend that reporting companies continue gathering information necessary to comply with their BOI reporting, and remain vigilant to respond to any future rulings.
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