February 5, 2025: U.S. Government Files Motion to Appeal Nationwide CTA Stay

On February 5, 2025, the United States government filed a motion to appeal the nationwide stay on the reporting rule in Smith v. United States Department of the Treasury. The motion was submitted in response to the nationwide stay issued by a federal district court in Texas, which temporarily suspended the enforcement of the Corporate Transparency Act’s (CTA) reporting requirements. 

In its motion, the government contends that the court should reconsider the preliminary relief that includes the nationwide stay on the reporting rule, urging alignment with the United States Supreme Court’s recent decision to lift the stay on the nationwide injunction against the CTA 

Additionally, the government indicated that, should the stay on the reporting rule be lifted, the Financial Crimes Enforcement Network (FinCEN) plans to issue a 30-day extension to the reporting deadlines presumably from the date the stay is lifted. FinCEN stated it would also consider potential changes to the reporting rule to reduce the burden on “low-risk entities,” although these adjustments would depend on whether the government deems such changes “warranted.”

For professionals assisting clients with Beneficial Ownership Information (BOI) filings, it is important to note that a removal of the stay, coupled with the 30-day extension, could place the new filing deadlines right in the midst of tax season. Firms that have not already done so should begin planning how to allocate sufficient time to gather and collect the necessary information from clients to ensure compliance, in the case the CTA’s reporting rule becomes enforceable.  

Even with the potential repeal of the stay on the reporting rule, the CTA still faces legal challenges. The Fifth Circuit is set to hear oral arguments over the constitutionality of the CTA in Texas Top Cop Shop, Inc. v. Garland on March 25. The complete settlement of this case could come after the initial reporting deadline has passed, including the 30-day extension that would be put in place should the Smith stay be lifted. The government’s decision to appeal the Smith case however is significant, as it underscores the new administration’s commitment to defending the CTA’s constitutionality and its intent to continue addressing the pressing the legal matters left by the previous administration. 

January 23, 2025 – Supreme Court Grants Stay Against Injunction on the Corporate Transparency Act & Impact from Smith case

Washington, D.C. — The United States Supreme Court issued a crucial decision granting a stay on the nationwide injunction on the CTA on January 23rd, 2025. The decision, made in relation to case No. 4:24–cv–478 from the United States District Court for the Eastern District of Texas, halts the enforcement of the December 5th, 2024, nationwide injunction.

The application for the stay (24A653), initially presented to Justice Samuel Alito, was granted. The stay will remain in effect pending the outcome of an appeal in the United States Court of Appeals for the Fifth Circuit and the resolution of a potential petition for a writ of certiorari. Notably, Justice Jackson issued the lone dissenting opinion in the case.

This may sound like the CTA is fully enforceable again, placing all businesses that have not yet filed at potential legal risk pending further action, however, it is not this simple due to other existing court cases.

What Does It Mean for the CTA?

Although the Supreme Court’s ruling reinstates the enforcement of the CTA, obstacles remain that continue to prevent full implementation of its requirements. In early January another federal district judge in Texas in Smith v United States Department of The Treasury placed a nationwide stay on the effective date of the reporting rule not the law itself. What does this mean in general terms? The following is guidance straight from FinCEN’s website:

In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”

Beneficial Ownership Information reports are still currently voluntary despite the Supreme Court’s recent stay.

What’s Next?

While FinCEN has not yet appealed the decision in the Smith case, they are likely to do so. If the appeal is successful and the stay is lifted, the CTA and its reporting requirements could resume in full force. It is important to closely monitor developments in this case, as the removal of the stay may require businesses to file quickly to avoid steep penalties.

The Fifth Circuit Court of Appeals will hear oral arguments in Texas Top Cop Shop, Inc. v. Garland regarding the constitutionality of the CTA, starting March 25, 2025.

Bulk Entity Upload: Simplify Your Compliance Process 

Navigating the ever-evolving landscape of Beneficial Ownership Information (BOI) reporting can be a challenging task. Recent court rulings have introduced uncertainty to filing timeframes, making it even more difficult for businesses and professionals to stay on top of regulatory requirements. Software designed to make filing more efficient – such as tools that include a bulk entity upload feature – can help. 

bulk entity upload

As a result, firms may be seeking efficient systems that allow them to quickly adapt to any new information, even when changes occur at the last minute. 

Why Bulk Entity Upload is Essential

As demonstrated by the nationwide preliminary injunction issued out of Texas and FinCEN’s subsequent appeal, the regulatory environment can change rapidly. Having a system in place that allows for the quick entry of multiple entities provides professionals with a valuable tool to swiftly adapt to new guidance—especially if it’s issued just days before the January 1, 2025, deadline.  

Secure Compliance’s bulk upload features enable firms to upload information for multiple entities simultaneously, significantly reducing the time and effort required compared to individual data entry. 

We offer both a base bulk upload feature and a premium white-glove version. The differences are outlined below, but whichever version you choose, these features can save your firm valuable time when you need it most.   

Base Bulk Entity Upload

The base bulk entity upload feature is included in our $995 SecurePRO package. With this package, you can download a sample CSV file, enter your entity information, and upload any correctly formatted CSV file. Our software will then process the information into the system. After a successful upload you can add any additional information to individual entities as needed.  

HOW IT WORKS

  1. Data Preparation: Gather and format your entity information for bulk upload, by either downloading our sample CSV file or formatting an existing CSV file to fit for upload.
  2. Processing: Our system processes the data, ensuring all information is filled into separate entity records.  
  3. Review and Submit: You will then be able to review the uploaded data for accuracy, add any beneficial owners, and fill in any remaining information needed. 

White Glove Bulk Entity Upload

We also offer a premium white-glove option, where we take from existing files you already have (such as reports from tax software) and upload it into our system, eliminating the need for you to format your data to meet the requirements of the base bulk upload feature. Simply send us the file, and we’ll take care of the upload for you. To learn more about this service, please contact our sales team.  

HOW IT WORKS

  1. Consultation: Speak with a member of our sales team to discuss the information you have and to learn the specifics about pricing and timelines (this varies depending on individual cases). 
  2. Submit Your Information: Send the file and/or information to our team, and we’ll handle the rest. Once the upload is complete, we’ll notify you so you can add any additional details for your entities as needed. 

Stay Ahead with Secure Compliance

As policy changes continue to shape the compliance landscape, firms must adapt quickly to stay compliant. Bulk entity upload is a crucial tool in this endeavor, providing the efficiency and accuracy needed to manage large volumes of data.  

For more information on how Secure Compliance’s bulk entity upload can benefit your firm, contact us today. Don’t let tight or unclear deadlines overwhelm you. Let Secure Compliance simplify your compliance process.

Understanding FinCEN Beneficial Ownership Reporting Requirements: A Detailed Guide

FinCEN Beneficial Ownership Reporting Requirements – The Basics

fincen beneficial ownership reporting requirements - secure complianceThe Financial Crimes Enforcement Network (FinCEN) Beneficial Ownership Information (BOI) reporting requirements represent a significant step towards increasing transparency and combating illicit activities in the financial system. With the implementation of the Corporate Transparency Act (CTA), millions of entities in the U.S. are now required to disclose their beneficial ownership information. This guide provides a detailed overview of what is included in a beneficial ownership report under FinCEN rules and how entities can ensure compliance.

What is Beneficial Ownership?

Beneficial ownership refers to individuals who ultimately own or control a company, even if the ownership or control is exercised indirectly through other entities or arrangements. Under FinCEN rules, a beneficial owner is any individual who meets one or more of the following criteria:

  1. Ownership: Having direct or indirect ownership of or control over at least 25% of the entity’s ownership interests.
  2. Control: Having substantial control over the entity, this can apply to executives, senior managers, or anybody with the power to decide on important matters for the business.

Key Requirements of BOI Reporting

Identification of Beneficial Owners

Entities must identify and report information about each beneficial owner, including:

  1. full legal name
  2. date of birth
  3. residential address
  4. a unique identifying number from an acceptable identification document (e.g., passport, driver’s license)
  5. an image of the identification document

Reporting Timeline

By January 1, 2025, entities in existence before January 1, 2024, must submit their first BOI report. The entities formed during 2024 must report within 90 days of formation. After 2024, newly created entities are required to file within 30 days if creation. Not only does an initial report have to be filed, but all information must be kept up to date. Meaning, if any information previously reported changes, it must be reported within 30 days after the modification.

Entities Subject to Reporting

BOI reporting applies to the majority of entities, including corporations, limited liability companies, and other businesses that are created in the United States or registered to do business here. Nevertheless, large operating companies, highly regulated entities, and dormant entities are among the 23 categories of entities that are exempt from reporting.

Common Challenges in BOI Reporting

  1. Identifying Beneficial Owners: When ownership is dispersed over several levels of an entity, it may be difficult to identify all beneficial owners. Not only are beneficial owners those with ownership interests, but they are also those with substantial control, regardless of their financial interests in the entity.
  2. Data Accuracy and Verification: It can be challenging to ensure that the information presented is accurate and to confirm the identity of the beneficial owners. It is the reporting company’s responsibility to ensure that reported information is correct. Tracking down the required information from all beneficial owners may require follow up mechanisms, adding time to the compliance process.
  3. Maintaining Compliance: Reporting may not end with the filing of the first BOI report. Information must stay up to date with FinCEN, which means that internal processes that foster prompt reporting must be considered as beneficial ownership shifts within an entity. Any changes to BOI (example: beneficial owner moving to a new address, company hiring a new CEO, etc.) must be reported within 30 days of the change.

How Secure Compliance Simplifies BOI Reporting

Secure Compliance offers robust solutions to streamline the BOI reporting process, providing entities with what they need to comply with FinCEN requirements efficiently and accurately.

Here’s how our tools can help:

  • Automated Data Collection: SecureFILE and SecurePRO automate the collection of beneficial ownership information, reducing the manual effort required and minimizing the risk of errors.
  • Simplified Reporting: With user-friendly interfaces and step-by-step guidance, our solutions make it easy to complete and submit BOI reports, even for business owners that aren’t thoroughly versed in the CTA.
  • Ongoing Compliance Support: Secure Compliance provides ongoing support to help you stay up to date with any changes in reporting requirements and ensure continuous compliance.

We Are Your Partner in BOI Reporting

Understanding and complying with the FinCEN beneficial ownership reporting requirements is crucial for entities operating in the U.S. By identifying beneficial owners, maintaining accurate records, and staying informed about reporting deadlines, you can avoid penalties and contribute to a more transparent financial system. Secure Compliance is here to assist you every step of the way, offering reliable tools and expert support to simplify your compliance journey.

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New York LLC Transparency Act: What Is It?

What is the New York LLC Transparency Act (NYLTA)?

On December 22, 2023, Governor Kathy Hochul of New York signed into law Senate Bill 995B/Assembly Bill 3484A, marking a pivotal moment for Limited Liability Companies (LLCs) operating within the state. This legislation, known as the New York LLC Transparency Act (NYLTA), was significantly amended on March 1, 2024, changing the trajectory of this reporting requirement for entities domiciled in New York.

Key Provisions of the NYLTA

Under the NYLTA, both domestic LLCs formed in New York and foreign LLCs authorized to do business in New York must file beneficial ownership information (BOI) with the New York Department of State.

This requirement aligns with the federal Corporate Transparency Act (CTA), targeting LLCs that must file a beneficial ownership information (BOI) report with the Financial Crimes Enforcement Network (FinCEN). Exempt LLCs under the CTA, and thus the NYLTA, must submit a statement to the New York State Department, signed by a company member or manager, indicating the exemption provisions they qualify under.

Companies subject to reporting requirements must disclose beneficial owners’ full legal names, dates of birth, current business street addresses, and a unique identifying number from an acceptable document (e.g., US passport, driver’s license). The NYLTA’s definition of a “beneficial owner” mirrors the definition under the CTA as any individual who, directly or indirectly, exercises substantial control over the LLC or owns at least 25% of its ownership interests.

New York LLCs formed or registered before January 1, 2026, will have until January 1, 2027 to disclose their beneficial owner information to the state. Those formed after the effective date must report their BOI to the state the same day that they file formation documents. Failure to file within 30 days places an LLC in the public database with the status of “Past Due, escalating to “Delinquent” if the failure extends beyond two years without rectification.

The NYLTA introduces a dynamic aspect to compliance through its updating requirements. The March 1, 2024, amendment transformed the obligation into an annual confirmation or update of BOI or exempt status. This requirement varies greatly from that of the CTA, since the CTA requires that updates be filed within 30 days of a change. Also, the NYLTA sets a 90 day requirement on corrected reports, while the CTA’s is 30 days.

Privacy Considerations and Access to Information

Addressing privacy concerns, the NYLTA initially planned for a publicly accessible database of beneficial owners. However, the chapter amendment revises this approach, ensuring personal identifying information submitted under the LLCTA remains confidential. This measure balances the demand for transparency with the need to protect individual privacy, making information accessible solely for law enforcement or as required by court orders.

Submitting CTA BOI Reports to New York

The chapter amendment permits an entity to submit their initial BOI Report filed under the CTA, provided that all necessary information as required by the NYLTA is included. While this may help reduce reporting efforts, it is not applicable to all entities. Specifically, individuals and entities who obtain and report FinCEN Identifiers (FinCEN IDs) would prevent the NY entity from submitting that report to the state. This is because the information associated with a FinCEN ID is not accessible to the Secretary of State, resulting in an initial report that lacks the required information under the NYLTA.

Looking Ahead

The enactment of the NYLTA signifies a move towards greater transparency and accountability in the operations of LLCs in New York. As the legislative landscape continues to evolve, with amendments and potential replacements on the horizon, LLCs must stay vigilant and prepared to adapt to these new regulatory demands. The extended timelines and revised provisions offer entities additional time to align with the NYLTA’s requirements, underscoring the importance of proactive compliance and the ongoing dialogue between the state legislature, regulatory bodies, and the business community.

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Part 1: Do Business Owners Need Professional Help With BOI Reporting?

Is Help With BOI Reporting Really Needed?

By now, most readers have likely heard of the Corporate Transparency Act (CTA), which became effective in January.

This legislation requires businesses to report their beneficial ownership information (BOI) to the government. However, there are a few critical considerations to keep in mind to ensure compliance and avoid penalties.

help with boi reporting - secure complianceIn March 2024, a district court ruling declared the CTA unconstitutional. This judgement affected only a minority of entities – those associated with the plaintiff of the case, the National Small Business Association (NSBA).

With approximately 65,000 members impacted, this is a small fraction compared to the estimated 32.6 million entities that still need to report by the end of 2024.

For the vast majority of businesses, CTA compliance remains a pressing issue, highlighting the necessity for professional help with BOI reporting.

Complexity and Confusion in Regulations

The CTA’s regulations are intricate and may be perceived as vague, leading to potential under-reporting or over-reporting by business owners. The definitions within the regulations are not always clear-cut.

For instance, identifying individuals with “substantial control” over an entity, such as determining who qualifies as a senior officer involves more than just looking at titles. It’s about understanding the roles and responsibilities at a company.

A person with the title “Manager” might fall under the definition of a senior officer if their role and responsibilities align with the criteria set forth in the CTA.

A few other examples that call for the input of a professional include determining if an entity qualifies for an exemption, identifying the company applicants that need to be reported (if applicable), and considering the need for beneficial owners to obtain FinCEN Identifiers.

Determining 25% ownership rules can also get complex with tiered entity structures. Such complexities make it easy for business owners to misinterpret the requirements, resulting in either incomplete or excessive reporting. This is where professionals can step in to provide clarity and ensure accurate reporting.

Professionals are well-versed in interpreting these definitions and can guide business owners through the nuances, ensuring compliance without overburdening them.

Ongoing Compliance and Updates

The initial filing is just the beginning of the compliance journey. Business owners must also be aware of the requirement to file updates within 30 days of any change in previously filed information.

This means that any changes in ownership, substantial control, or exempt status require another report be filed. If a previously reported company becomes exempt, such as by becoming inactive, it must submit a “newly exempt entity” BOI Report.

The ongoing nature of these compliance requirements demands a level of vigilance and understanding that many business owners may not possess.

Professionals can help monitor these changes and ensure timely updates, avoiding potential penalties. They can use software to organize information and report updates efficiently.

They can also educate business owners on what changes require updates to be filed. This proactive approach not only ensures compliance but also reduces the risk of last-minute scrambles to meet reporting deadlines.

Lack of Awareness and Proactive Communication

Despite the significance of the CTA, many business owners are still unaware of its existence and the obligations it imposes. This lack of awareness can lead to non-compliance, which carries significant penalties.

Professionals play a non-negotiable role in bridging this knowledge gap. They can get a jump on communicating with their clients, ensuring they are aware of the CTA requirements.

Strategic Approaches to Client Support

Professionals have several options for assisting clients with CTA compliance, depending on the level of engagement and support the client needs:

  1. A comprehensive, white glove approach involves handling the entire CTA process for the client, from the initial filing to managing updates. This engagement is ideal for clients who prefer a hands-off approach and want assurance that their compliance needs are fully managed.
  2. Professionals can guide clients through the initial filing, after which the clients will manage their own compliance going forward. This approach offers a balance between professional guidance and client independence.
  3. For those who prefer not to engage directly with CTA compliance, educating clients about their obligations and referring them to trusted resources for compliance can be an effective strategy. Professionals can even build a network of trusted compliance specialists to whom they can refer clients.

How Will You Help With BOI Reporting?

The CTA compliance landscape is complex, and the need for professional assistance is clear. Business owners face a myriad of challenges, from understanding vague definitions to managing ongoing updates.

Whether offering assistance through full-service management, advisory roles, or educational support, professionals play a critical role in helping business owners achieve and maintain compliance. As the deadline approaches and ongoing updates are required, now is the time to determine how you will assist your clients in achieving and maintaining compliance.

This proactive approach not only ensures compliance but also fosters trust and long-term relationships with clients, positioning you as a valuable partner in their business success.

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