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FinCEN Beneficial Ownership Information Reporting

Update - December 3, 2024

The U.S. District Court for the Eastern District of Texas has issued a nationwide preliminary injunction of the filing requirements for Beneficial Ownership Information Reports ("BOIR") as required by the Corporate Transparency Act. Texas Top Cop Shop, Inc. vs. Garland, No. 4:24-CV-478 (E.D. Texas 12/3/24). This injunction prohibits the federal government from enforcing the BOIR filing deadlines and requirements, as stated in the injunction issued by Judge Mazzant:

"...the Court GRANTS Plaintiff’s Motion for a Preliminary Injunction. Therefore, the CTA, 31 U.S.C. § 5336 is hereby enjoined. Enforcement of the Reporting Rule, 31 C.F.R. 1010.380 is also hereby enjoined, and the compliance deadline is stayed under § 705 of the APA. Neither may be enforced, and reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court."

The federal government is likely to appeal on an emergency basis and this preliminary injunction could be stayed prior to the January 1, 2025 filing deadline. The US Department of Treasury, the agency responsible for the Financial Crimes Enforcement Network which collects the BOIR has not yet made any public statement about the injunction and is still collecting BOIRs. There is currently no procedure to remove information which has already been filed.

 If you have not filed a BOIR Report, you have three options:

A) Assume the injunction will be permanent and ignorethe BOIR rules unless the preliminary injunction is overturned.

B) Gather the BOIR information and documents, prepare the filings, and continue to monitor the court decisions and agency guidance to be prepared to file on short notice, if the injunction is lifted.

C) File the BOIR now while it is not legally required so you don't need to worry about the status of the injunction.

The original BOIR information follows:

If you would like assistance completing these new requirements on nearly all companies in the United States, please contact our office promptly to ensure we help you timely meet these filing requirements.

Beginning January 1, 2024, the Financial Crimes Enforcement Network (FinCEN) rule, 31 C.F.R. § 1010.380, implementing the bipartisan Corporate Transparency Act’s beneficial ownership information (BOI) reporting provisions became effective. The FinCEN BOI rule requires most companies (LLC/Inc and some partnerships) to report certain information about the company and its owners and officers.

For companies formed between January 1 and December 31, 2024, the filing deadline is 90 days after the company is filed with the secretary of state ("Formation"). For companies in existence prior to 2024, the filing deadline is December 31, 2024. For companies formed on or after January 1, 2025, the filing deadline is 30 days after Formation.

What information is collected?

• Entity Legal Name

• Tax Identification Number

• State where the company was formed

• Business Address (may not be a PO Box)

• Company Applicant(s) identification

• Beneficial Owner Identification

Who must be identified as a Company Applicant? If the company was formed on or after January 1, 2024, the company must report Company Applicants to FinCEN. Company applicants include any individual (a) who filed the formation documents (article of organization or incorporation) with the secretary of state (or other similar state agency), or (b) directs or controls the filing.

Who must be identified as a Beneficial Owner? Each person who owns 25% or more of the company, and all individuals with "substantial control".  An individual has substantial control if (1) the individual is a senior officer; (2) the individual has authority to appoint or remove certain officers or a majority of directors of the reporting company; (3) the individual is an important decision-maker; or (4) the individual has any other form of substantial control over the reporting company.

Filing updates in the future? Any changes to the reported information, such as company address or beneficial owners and officers, must be reported within 30 days.

Exceptions?

• Large Entities which have (a) 20 or more full time U.S. employees, (b) a U.S. physical office, and (c) more than $5,000,000 in annual gross sales.

• Inactive entities formed prior to January 1, 2020, which own no assets and didn't receive or spend more than $1,000 on or after January 1, 2024.

• Entities dissolved on or before December 31, 2023.

Penalties? Penalties for failing to comply are significant, and could include civil fines and criminal penalties, including the potential for being sentenced to confinement.

Who can access this information? Any law enforcement agencies with court approval, federal government agencies engaged in national security, intelligence, or law enforcement activity, certain foreign law enforcement, financial institutions, federal regulators, U.S. Treasury personnel. Law enforcement activity may include civil litigation. Disclosure to other parties in civil litigation is permitted, in cooperation with one of the above listed agencies. For additional details, please review the FinCEN BOI Access and Safeguards Rule.

For more detailed information about these requirements, please review the BOI Small Entity Compliance Guide: www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide_FINAL_Sept_508C.pdf 

Please call or e-mail our office for assistance complying with this rule.