Recent legal developments have created confusion surrounding Beneficial Ownership Information (BOI) reporting deadlines for businesses. To stay compliant and avoid penalties, businesses must understand the shifting landscape and prepare for possible changes. Below, we outline the current situation, key considerations, and practical steps for business owners.

Key Developments in BOI Reporting Deadlines

1. Texas Federal District Court Ruling (December 3, 2024):
   A federal court ruled that penalties could not be imposed for failing to file BOI reports during the injunction period. This decision indefinitely delayed the January 1, 2025, deadline.
2. Fifth Circuit Court of Appeals (December 23, 2024):
   The ruling reversed the Texas court’s injunction, reinstating the BOI filing requirements and the January 1, 2025, deadline.
3. FinCEN Filing Extension (December 23, 2024):
   On the same day, FinCEN extended the filing deadline to January 13, 2025, to allow businesses more time to comply.
4. Reinstated Injunction (December 26, 2024):
   The Fifth Circuit vacated its stay on the Texas court’s injunction, halting enforcement of penalties for non-compliance during the injunction period.

Who Does the Injunction Affect?

• Existing Entities (as of January 1, 2024): Reporting companies originally required to file by January 1, 2025, are temporarily exempt.
• New Companies Formed in 2024: Businesses with a 90-day filing deadline can delay submission during the injunction.
• Entities with Reportable Changes: Companies required to file updated reports within 30 days of changes are also covered.
• Companies Formed in 2025: Newly created entities that would have had a 30-day deadline are not required to file during the injunction period.

FinCEN has clarified that BOI filings are voluntary while the injunction is in place.

Compliance Challenges and Ongoing Litigation

The Corporate Transparency Act (CTA), which mandates BOI reporting, has sparked legal challenges across the U.S. Courts remain divided on its constitutionality:

• Texas and Alabama Cases: A Texas court issued a nationwide injunction, while an Alabama court ruled the CTA unconstitutional but limited its decision to specific plaintiffs.
• Mixed Rulings in Other States: Courts in Oregon, Michigan, and Virginia have declined to halt enforcement, citing the law’s likely constitutionality.

As appeals progress, businesses should monitor developments closely.

Steps for Business Owners

To navigate this uncertainty, businesses should take the following steps:

1. If You’ve Already Filed: No further action is needed unless changes occur requiring an update.
2. If You Haven’t Filed: Filing is optional during the injunction, but businesses may voluntarily submit reports to avoid last-minute deadlines.
3. Monitor Legal Updates: Courts may lift the injunction at any time, potentially giving businesses a short window—sometimes as little as 13 days—to comply.
4. Prepare Documents in Advance: Collect required information to ensure quick submission if the deadline is reinstated.

Overview of BOI Reporting Requirements

The CTA aims to enhance transparency and reduce illicit activities by requiring small businesses to disclose beneficial ownership information. Key criteria include:

• Entities Affected: Single-member LLCs, small multi-member LLCs, S-Corps, and small C-Corps meeting certain thresholds.
• Exemptions: Businesses with over 20 full-time employees, gross receipts exceeding $5 million, or no physical U.S. presence are exempt.

Penalties for Non-Compliance

Failure to comply with BOI reporting requirements can result in severe penalties, including:

• Civil Penalties: Up to $591 per day for each violation.
• Criminal Fines: Up to $10,000.
• Imprisonment: Potentially up to two years.

Penalties can apply to anyone who willfully files false information or fails to file, including senior managers, corporate officers, and beneficial owners.

Why Compliance Matters

While the CTA targets entities involved in illegal activities, its broad scope affects legitimate businesses as well. Understanding the law helps maintain compliance and avoid unnecessary penalties.

The evolving nature of BOI reporting requirements underscores the importance of preparation. Businesses must remain vigilant, collect necessary documents, and consult trusted advisors. By staying proactive, companies can ensure compliance and minimize disruptions.