Important Update: Court Reinstates Injunction on BOI Reporting Requirements

Important Update: Court Reinstates Injunction on BOI Reporting Requirements

The legal status of the Corporate Transparency Act’s (CTA) Beneficial Ownership Information (BOI) reporting requirements continues to evolve rapidly. On December 26, 2024, the U.S. Court of Appeals for the Fifth Circuit vacated its previous order that had lifted the nationwide preliminary injunction. As a result, companies are not currently required to file BOI reports with FinCEN, and no penalties will apply for non-filing while the injunction remains in effect.

This latest development follows a series of quick-moving legal actions. On December 3, the U.S. District Court for the Eastern District of Texas initially halted enforcement through a nationwide preliminary injunction. While this injunction was briefly lifted on December 23, leading Treasury to establish a January 13, 2025 filing deadline, the current ruling has reinstated the pause on enforcement.

The government maintains that the CTA is constitutional and continues to defend the law in multiple ongoing legal challenges. The Department of Justice, representing Treasury, has appealed the initial injunction and is actively pursuing legal remedies. Several district courts have already ruled in favor of Treasury, including the U.S. District Courts for the Eastern District of Virginia and the District of Oregon.

During this period of uncertainty, JSI recommends a measured approach. While companies are not required to proceed with BOI filings at this time, they may choose to do so voluntarily. For those who prefer to wait, we strongly advise maintaining all collected beneficial ownership information and continuing preparation efforts to ensure readiness for various possible outcomes. Reports must include identifiable information about the company and its beneficial owners – individuals who either exercise substantial control or own/control 25% or more of the company.

The previously outlined exemptions, including those for large operating companies, public utilities, tax-exempt entities, and qualifying subsidiaries, remain relevant for when reporting requirements resume. FinCEN has made available a small company compliance guide which can be helpful in determining whether your company meets one of these exemptions. We encourage companies to continue evaluating their status under these exemptions and to maintain documentation supporting any claimed exemptions.

JSI will continue monitoring these developments closely and provide updates as the situation evolves. For assistance with understanding these requirements or support through the filing process, contact John Kuykendall or Brett Hallagan. Our team can help you understand the requirements, prepare documentation, and navigate the FinCEN filing system.