IN SHORT:
As of February 27, companies currently ARE required to file beneficial ownership information (BOI) reports in conformity with the corporate transparency act by March 21, 2025, HOWEVER, FinCEN has announced it will not issue any fines or penalties until a final rule becomes effective.
The Corporate Transparency Act (CTA) was enacted by Congress in 2021 and became effective as of January 1, 2024. Prior to the Corporate Transparency Act, businesses were not required to file information about the ownership structure or individual information of owners that were involved with the entity. The purpose of the CTA is to require businesses to now file ownership information in an attempt to crack down on money laundering, terrorist financing, tax fraud, and drug trafficking.
When the CTA went into effect, companies that existed prior to January 1, 2024 were required to file a Beneficial Ownership Information (BOI) report by January 1, 2025. However, there have been several cases across the country that have challenged the constitutionality and enforceability of the CTA, leaving business owners confused on the current state of the law.
The timeline of recent CTA rulings is as follows:
January 1, 2024: Corporate Transparency Act BOI reporting becomes effective.
December 3, 2024: The CTA filing requirements put on hold per a nationwide preliminary injunction ordered by the U.S. District Court for the Eastern District of Texas in Texas Top Cop Shop, Inc., et al. v. McHenry (E.D. Tex.).
December 23, 2024: A motions panel of the U.S. Court of Appeals for the Fifth Circuit Court granted a stay and thus paused enforcement of the injunction. This resumed CTA filing requirements as initially intended, but with an extended filing deadline of January 13, 2025.
December 26, 2024: A different Fifth Circuit panel vacates the stay, which reinstates the injunction and halts filing indefinitely, with a March 25, 2025 oral argument scheduled for the matter.
December 31, 2024: The Department of Justice seeks a stay of the injunction pending an appeal from the Supreme Court of the United States.
January 23, 2025: The Supreme Court grants the December 31 motion to stay the nationwide injunction, meaning that the BOI filing requirement remains until further notice. However, because of a separate nationwide order to halt the BOI requirement was issued by a different federal judge in Texas, reporting companies are not currently required to file BOI reports with FinCEN, but may do so voluntarily.
February 18, 2025: The Court in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 issues a decision that makes BOI Reports once again required with a new deadline of March 21, 2025.
February 27, 2025: FinCEN announces it will not issue any fines or penalties or take any other enforcement actions for failure to file BOI Reports until an interim final rile becomes effective and the relevant due dates within that rule have passed.
So, what does this mean for companies? An interim final rule for the filing of a BOI report for your company is to be published on March 21, 2025. Although filing is again mandatory, the Treasury Department is not currently enforcing any fines or penalties. However, the penalties are expected to resume once the final interim rule has established new filing deadlines. Plan to file the BOI report for your company if you have not done so.
Mackenzie Murphy’s Law will continue to monitor the situation and update readers on any future developments. If you have any questions or concerns about the CTA and BOI reports, please reach out through the “Contact” page.
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1 Ohio Secretary of State, The Corporate Transparency Act, Federal Legislation Requiring Beneficial Ownership Information Reports (updated December 26, 2024) https://www.ohiosos.gov/businesses/corporate-transparency-act/; See also Financial Crimes Enforcement Network, Beneficial Ownership Information(updated January 2, 2025), “The CTA levels the playing field for tens of millions of law-abiding small businesses across the United States and makes it harder for bad actors to exploit loopholes in order to gain an unfair advantage.” https://fincen.gov/boi.
2 Financial Crimes Enforcement Network, FinCEN Not Issuing Fines or Penalties in Connection with Beneficial Ownership Information Reporting Deadlines (February 27, 2025) https://www.fincen.gov/news/news-releases/fincen-not-issuing-fines-or-penalties-connection-beneficial-ownership
