Update as of December 26, 2024:  Filing is paused again 

The legal landscape for beneficial ownership reporting under the Corporate Transparency Act (CTA) is starting to feel like a ping-pong match with its dizzying back-and-forth motion.

As noted below, on Monday, December 23, 2024, the Fifth Circuit Court of Appeals stayed the nationwide preliminary injunction, re-instating the filing requirement. But just as everyone began to adjust, the ball took an unexpected bounce: on December 26, 2024, a different panel of the same court issued a new order reinstating the nationwide preliminary injunction.

This means the beneficial ownership reporting requirements are once again paused, and enforcement is suspended until further notice. As of December 26, 2024, reporting companies are not required to file beneficial ownership information under the CTA unless and until another court order changes the game.

In response to this legal ping-pong, FinCEN issued an alert confirming that reporting companies are off the hook for now and won’t face liability for failing to file while the court order remains in effect. However, FinCEN has emphasized that companies may still voluntarily submit beneficial ownership information reports if they wish to do so.

For those trying to keep up with the rules, FinCEN’s Frequently Asked Questions (https://www.fincen.gov/boi-faqs) and Reference Materials (https://www.fincen.gov/boi/Reference-materials) provide additional clarity—at least until the next round. 

BDCo suggests that all reporting companies proceed with their filing on a voluntary basis.

Please consult with your attorney if you have questions about your specific situation. Full details about this reporting requirement are below. 

New Deadlines : Updated as of  12/25/2024 (see change above)

The deadline for companies required to file beneficial ownership information (BOI) reports was extended to Jan. 13, 2025, by the Financial Crimes Enforcement Network (FinCEN), hours after a Monday court ruling reinstated the reporting requirement.  See full details of this new reporting requirement below. 

The Fifth Circuit Court of Appeals granted a Department of Justice (DOJ) motion to lift an injunction put in place by a district court ruling Dec. 3 that the DOJ appealed.

The new deadlines are :

• Reporting companies created or registered before Jan. 1, 2024, have until Jan. 13, 2025, to file initial BOI reports with FinCEN. (These companies would otherwise have been required to report by Jan. 1, 2025.)
• Reporting companies created or registered in the United States on or after Sept. 4, 2024, that had a filing deadline between Dec. 3, 2024, and Dec. 23, 2024, have until Jan. 13, 2025, to file initial BOI reports with FinCEN.
• Reporting companies created or registered in the United States on or after Dec. 3, 2024, and on or before Dec. 23, 2024, have an additional 21 days from their original filing deadline to file initial BOI reports with FinCEN.
• Reporting companies that qualify for disaster relief may have extended deadlines that fall beyond Jan. 13, 2025. These companies should abide by whichever deadline falls later.
• Reporting companies that are created or registered in the United States on or after Jan. 1, 2025, have 30 days to file initial BOI reports with FinCEN after receiving actual or public notice that their creation or registration is effective.

Update as of 12/12/2024: 

Recently, the Corporate Transparency Act behind this requirement was challenged in court, and there is currently an injunction in place that makes this requirement unenforceable.  

While we don’t know how or when the court cases will be resolved, we still suggest completing the filing now before December 31, 2024.

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Here are the details of the Corporate Transparency Act (CTA) as written. 

Beginning  January 1, 2024, many companies in the United States will have to report information about their beneficial owners, i.e., the individuals who ultimately own or control the company. They will have to report the information to the Financial Crimes Enforcement Network (FinCEN) which is a bureau of the U.S. Department of the Treasury.

This information reporting rule is aimed at enhancing transparency and preventing illicit activities such as money laundering and terrorism financing.

The new report, called the Beneficial Ownership Information (BOI) report will be filed electronically with FINCEN beginning January 1, 2024.  Due to the nature of this filing, it will not be filed by your accountant but should be discussed with your attorney.  

Existing companies subject to these requirements have until January 1, 2025 to file their first BOI report. 

Who must file?

Your company may be a reporting company and will need to report information about its beneficial owners if your company is: 

1. A corporation, a limited liability company (LLC), or was otherwise created in the United States by filing a document with a secretary of
state or any similar office under the law of a state or Indian tribe 

or

2. A foreign company and was registered to do business in any U.S. state or Indian tribe by such a filing.

Exemptions: Twenty-three types of entities are exempt from being classified as "reporting companies" they include:

1. 1. Securities Reporting Issuer
   2. Governmental Authority
   3. Bank
   4. Credit Union
   5. Depository Institution Holding Company
   6. Money Services Business
   7. Broker or Dealer in Securities
   8. Securities Exchange or Clearing Agency
   9. Other Exchange Act Registered Entity
   10. Investment Company or Investment Adviser
   11. Venture Capital Fund Adviser
   12. Insurance Company
   13. State-Licensed Insurance Producer
   14. Commodity Exchange Act Registered Entity
   15. Accounting Firm
   16. Public Utility
   17. Financial Market Utility
   18. Pooled Investment Vehicle
   19. Tax-Exempt Entity
   20. Entity Assisting a Tax-Exempt Entity
   21. Large Operating Company
   22. Subsidiary of Certain Exempt Entities
   23. Inactive Entity

When must I file?

Reports will be accepted starting on January 1, 2024.

• • Companies Existing Before 2024: If your company was created or registered before January 1, 2024, you have until January 1, 2025, to file your first BOI report.
  • Companies Created or Registered in 2024: If your company is created or registered anytime in 2024, you have 90 days from when you're notified (or when it's publicly announced) about your company's creation or registration to file your first BOI report.
  • Companies Created or Registered After 2024: If your company is created or registered from January 1, 2025, onwards, you have 30 days from notification or public announcement to file your first BOI report.

How do I file the report? 

You can file online using the BOI E-Filing System to electronically file the Beneficial Ownership Information Report (BOIR) under the Corporate Transparency Act (CTA).

What must I report? 

You need to report on:

• • Beneficial Owners. These are individuals with a significant ownership stake (25% or more) in your company.  
  • Reporting companies must provide name, birthdate, address, and a unique identifying number (with the document image) for each beneficial owner.
  • Five types of individuals are exempt from being considered beneficial owners:

• • • Minor Child: If the individual is a minor child, as defined by the state or tribal law where the company is created or first registered, they are exempt. The reporting company can report the parent or legal guardian's information instead. However, this exemption ends when the minor reaches the age of majority, and if they are then a beneficial owner, their information must be reported.

    • Nominee, Intermediary, Custodian, or Agent: If an individual is acting merely as a nominee, intermediary, custodian, or agent on behalf of an actual beneficial owner, they are exempt. This often applies to individuals performing ordinary advisory or other contractual services, like tax professionals. The actual beneficial owner must still be reported.

    • Employee: An employee is exempt if they meet three criteria: they must be an employee as defined by federal regulation, their control or economic benefits from the company must be solely due to their employment status, and they must not be a senior officer of the company.

    • Inheritor: Individuals whose only interest in the company is a future right of inheritance (e.g., through a will) are exempt. This exemption ends once the individual inherits the interest and may then qualify as a beneficial owner.

    • Creditor: If an individual is a creditor of the company, meaning their beneficial owner status is solely through rights for payment (like a loan or debt to the company), they are exempt. This applies as long as this entitlement is their only ownership interest in the company.

• Company Applicants: Companies who were created or registered to do business in the US on or after January 1, 2024,  must report  individuals who were instrumental in the filing or registration of your company. 

Additional updated details are available online here https://www.fincen.gov/boi.