01/06/2025
Beneficiary Ownership Information Report (BOI) Updates
Let’s start from the beginning and discuss where we are now on December 27th.
Injunction Issued
On December 3, 2024, the U.S. District Court for the Eastern District of Texas in Texas Top Cop Shop, Inc. vs. Garland issued a preliminary injunction that prohibited the enforcement of the CTA and its implementing regulations (including the BOI reporting rule), finding that the CTA and its implementing regulations are likely unconstitutional.
The injunction made BOI reporting discretionary, but a major concern was the rapidly approaching January 1, 2025 regulatory deadline for reporting companies formed before January 1, 2024 to file their initial BOI reports. If the injunction was stayed or overturned later in December, reporting companies would have little time to comply.
Congressional Confusion
Meanwhile, Congress had a December 20 deadline to pass a continuing resolution to fund the government. The initial compromise bill would have extended the January 1, 2025 deadline to January 1, 2026; however, due to massive opposition, the bill died, and Congress passed a much smaller bill with no BOI deadline relief.
Injunction Relief
The government had requested an emergency stay of the injunction in the Fifth Circuit Court of Appeals. On December 23, a three-judge panel issued a stay of the temporary injunction, bringing back mandatory BOI reporting.
Almost immediately after the stay, FinCEN announced that the January 1, 2025 deadline would be extended to January 13, 2025; other relief was granted to other companies with reporting deadlines impacted by the injunction.
Injunction Returns
Fast forward three days to the evening of December 26, and the Fifth Circuit reversed the stay, stating that the injunction should stay in place while a different three-judge panel considers the merits of the government’s appeal.
As of December 27, 2024, at 9:30 ET, here is where BOI reporting stands:
• There is a temporary injunction against the reporting rule, making BOI reporting discretionary nationwide.
• If the injunction is lifted, reporting companies formed before January 1, 2024 must file their initial report by January 13, 2025 (unless FinCEN grants another short extension).
It remains my position that clients should be given information about the injunction, and they can decide whether to voluntarily comply or wait until the courts resolve the legal challenges. Taxpayers should have agency in their key business and tax decisions.
