In an unexpected development, the merits panel of the Fifth Circuit Appeals Court on December 26th essentially reinstated a nationwide injunction for Corporate Transparency Act (CTA) Beneficial Ownership Information Reporting (BOIR). This marked a sharp reversal from just three days earlier, when the court had granted the Government’s motion to “stay” the preliminary injunction and reinstated filing requirements.
This means that for all businesses nationwide, the crucial requirements to file BOIR have once again been temporarily suspended. The recently adjusted deadline of January 13, 2025 that applies to most businesses is essentially “paused” and no longer relevant as this legal battle continues.
The court explained its decision as necessary “to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments”. The court also expedited the appeal to the “next available oral argument panel”, which it appears could be the week of January 6th based upon the court’s published schedule.
Given the rapid-fire recent legal developments around this reporting, further changes are highly possible. The status of the injunction or additional delays could shift again as courts continue to address the constitutional challenges to the CTA.
So where do you go from here? The two primary paths forward are as follows:
File your BOIR voluntarily – ensuring compliance now avoids last-minute filing stress and possible civil and criminal penalty exposure if the requirement is ultimately upheld and you miss the filing window.
Ultimately, this reporting requirement is high-stakes, with onerous penalties that include civil fines of up to $591 per day, criminal fines of up to $10,000 per report, and up to two years of imprisonment. As such, if you choose to wait to file your BOIR, it is imperative that you monitor this legal battle for future daily developments. For a full copy of the most recent court decision – see this LINK.
Secure Compliance provides advanced technology solutions for professionals and businesses filing BOIR with FinCEN. We seek to make gathering information and filing the BOIR as painless and hassle-free as possible.
Pending continued legal developments on the status of the required Beneficial Ownership Information Reporting (BOIR), we recommend that you remain fully prepared for compliance.
Key steps to consider as part of preparation to file your BOIR include the following:
Obtain FinCEN IDs for Key Owners
If you haven’t already obtained FinCEN IDs for key beneficial owners, especially those that hold multiple entities, you may want to consider expediting obtaining these IDs. Obtaining a FinCEN ID can streamline reporting and also increase privacy for owners.
Engagement Management
For professionals and advisors, it is imperative to have a well-defined engagement letter or other contract with your client that clearly defines the scope of your work and your responsibilities.
Obtain and Document Key Entity Information
The designation of a “Beneficial Owner” includes both persons with direct or indirect ownership or control of more than 25% of an entity, or certain other persons with substantial control over the entity. Prior to filing, you should have a complete file documenting ownership and control persons of the business, including organization charts, governing legal documents, and ownership tables.
Account for Key Complexities
Make sure to account for additional key complexities when filing your BOIR, including:
Update – On December 23, 2024, the Fifth Circuit U.S. Court of Appeals put a “Stay” on the recent U.S. District Court injunction in the Texas Top Cop Shop v. Garland et. al. case.On top of it all, late in the day, FinCEN issued filing deadline relief until January 13, 2025 for most entities.This means that for 90% of all legal entities (LLCs, corporations, etc.), there is a January 13, 2025, due date for filing a FinCEN Beneficial Ownership Information Report.
As of December 1, FinCEN had received only 9.5 million of the 32.6 million required filings for entities existing as of January 1, 2024, plus an additional 5 million filings expected annually for new entities. This means just 25% of required entities have submitted their Beneficial Ownership Information. Non-compliance carries severe penalties, including civil fines of up to $591 per day, criminal fines of up to $10,000 per report, and up to two years of imprisonment. Business owners and professionals now face an urgent, high-stakes deadline early in the new year.
Recommended Steps To Pursue ASAP:
Obtain FinCEN IDs for Key Owners – If you haven’t already obtained FinCEN IDs for key beneficial owners, especially those that hold multiple entities, you may want to consider expediting obtaining these IDs. Obtaining a FinCEN ID can streamline reporting and also increase privacy for owners.
Engagement Management – For professionals and advisors, it is imperative to have a well-defined engagement letter or other contract with your client that clearly defines the scope of your work and your responsibilities.
Obtain and Document Key Entity Information –The designation of a “Beneficial Owner” includes both persons with direct or indirect ownership or control of more than 25% of an entity, or certain other persons with substantial control over the entity. Prior to filing, you should have a complete file documenting ownership and control persons of the business, including organization charts, governing legal documents, and ownership tables.
Account for Key Complexities – Make sure to account for additional key complexities when filing your BOIR, including:
Obtain Beneficial Owner Information – Included with each report will be either the FinCEN ID number for each Beneficial Owner, or the following information:
Full legal name
Date of Birth
Residential Address
A unique identifying number from an acceptable identification document (e.g. passport, driver’s license)
An image of the identification document
File the BOIR – You have two primary options for filing a FinCEN Beneficial Ownership Information Report:
File directly with FinCEN
File with a third-party software provider like Secure Compliance. Benefits can include:
Automated data collection
Data entry speed and ability to link single owners across multiple entities
Streamlined bulk uploads
Expert support
Monitor for Developments – Additional developments are expected in the weeks to come, including FinCEN guidance and possibly changes to the law by a new Congress next year. However, given timing – possible future changes cannot be relied upon, and it is imperative to comply with the rules as currently in force.
Immediate action is imperative for business owners and professionals to ensure compliance with this imminent January 13th, 2025, due date!
“As this imminent and high-stakes deadline for BOI reporting approaches, the ability to file in bulk and collect and manage information with advanced technology is critical for businesses and professionals facing tight time constraints,” said Paul Freidel, CEO of Secure Compliance. “Our platform simplifies mass filings, enhances data security, and ensuresthe necessary support to meet compliance requirements on time. We are committed to helping businesses avoid penalties and achieve peace of mind with their BOI reporting.“
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.
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
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.
Processing: Our system processes the data, ensuring all information is filled into separate entity records.
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
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).
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.
As the deadline for filing Beneficial Ownership Information (BOI) reports quickly approaches, it’s critical for businesses to ensure compliance with the Corporate Transparency Act (CTA). With less than 30 days left to file BOI reports, here are key steps you should take to prepare and file accurately and on time.
Understand the Reporting Requirements
First, make sure you fully understand the reporting requirements under the CTA. The CTA mandates that certain businesses must report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). Beneficial owners include individuals who:
Own 25% or more of the company.
Exercise substantial control over the company.
The required information to report about beneficial owners includes:
Full legal name
Date of birth
Residential or business address
Unique identifying number from an acceptable identification document (e.g., passport, driver’s license)
Image of the identifying document
Conduct a Beneficial Ownership Information Review
To ensure accurate reporting, conduct a thorough review to identify all beneficial owners of your company. This involves:
Reviewing articles of organization/incorporation, operating agreement, By-Laws and any other documents that illustrate the individuals with ownership or control.
Consulting with legal and compliance teams.
Documenting all findings accurately.
Gather Required Information
Collect the necessary information for each beneficial owner and the entity itself. This includes obtaining copies of identification documents and verifying the details provided. For the entity, make sure you have the tax ID, principal business address, any DBAs or trade names, and the jurisdiction of formation. Ensure all information is up-to-date and complete.
Prepare for Filing
Before submitting your BOI report, make sure to:
Review all information for accuracy.
Ensure compliance with FinCEN’s submission guidelines.
Address any discrepancies or missing information.
File BOI Reports
Submit your BOI report through the FinCEN reporting system or a trusted BOI reporting software. Keep a record of the filing transcript for future reference and consider sharing with your CPA or lawyer. If you encounter any issues during the submission process, consult FinCEN’s guidelines or seek assistance from legal or compliance experts.
Stay Updated
After filing your BOI report, stay informed about any updates or changes to the reporting requirements. FinCEN may release additional guidance or amendments, so it’s essential to remain compliant with the latest regulations. Don’t forget to file any updated BOI reports if any information changes about the entity or its owners. Changes must be reported within 30 days.
Conclusion
With less than a month left to file BOI reports, it’s important to take these steps to ensure timely and accurate submission. Understanding the requirements, conducting a thorough review, using compliance tools, and staying updated will help you meet the deadline and avoid potential penalties.
In a landmark decision, the U.S. District Court for the Eastern District of Texas has issued a nationwide preliminary injunction against the enforcement of the Corporate Transparency Act (CTA) in the case Texas Top Cop Shop v Garland et al. (case 4:24-cv-00478, December 3, 2024). This ruling could turn into permanent, significant implications for small businesses across the country, as the court questions the constitutionality of the Corporate Transparency Act (CTA) and its impact on business operations. On December 5, just two days after the ruling, the U.S government filed an appeal to the U.S Court of Appeals for the Fifth Circuit against the preliminary injunction.
An important fact to take away from the injunction is that the CTA was not ruled unconstitutional and is not necessarily gone for good.
Nationwide Impact of Injunction on CTA Reporting
Although the plaintiffs called for the injunction to apply only to them, the Court ultimately decided that the preliminary injunction be applied nationwide, explaining that the broad impact of the CTA calls for uniform relief. Approximately 32.6 million businesses are affected, unlike the previous Alabama District Court ruling in March of 2024 that only affected the plaintiffs.
Guidance for Businesses and Professionals
Many business owners and advisors are now questioning what their next steps should be. Here are a couple of possibilities:
Continue Preparation:
Some might decide to continue gathering beneficial ownership information without filing, to be prepared if the CTA is reinstated. Determining beneficial owners and substantial control—and gathering the necessary information—is a time-intensive process. Pausing these efforts, especially with traditional year-end busy seasons for advisors approaching, may not be viable. If the preliminary injunction is overruled in the last week of December, business owners and professionals could be in a mad scramble to get everything and filed in a timely manner. FinCEN’s filing system may even experience issues with the volume of reports trying to be filed. Alternatively, if the preliminary injunction was overturned in February 2025 for instance, all reports previously due January 1, 2025 could be due immediately upon the overturn of this injunction – leaving FinCEN or Congress with the opportunity but no guarantee of offering filing deadline relief.
Pause and Monitor:
Others may decide to wait for further developments before continuing preparation of Beneficial Ownership Information Reports. If the CTA is ultimately ruled unconstitutional and not replaced with a modified version of the law by Congress, ceasing work could avoid unnecessary effort and expenditure. Ultimately, this approach only makes sense however if the amount of work required is manageable if a last-minute scramble scenario arises.
No matter how you proceed, proactive communication with clients and other beneficial owners is critical. As with any compliance issue, your clients rely on you to keep them informed about compliance changes and how they affect them. Whatever happens next, it’s good to remind your clients to amend operating agreements that are out of date, or any other maintenance that may have been discovered during this information gathering and review process.
Possible Future Directions
The path forward for the CTA is uncertain and could take several directions:
Delay:
Multiple courts have rejected requests for injunctions, holding that the Corporate Transparency Act is constitutionally defensible. If ultimately the CTA is sustained as current legal actions play out, it is possible that FinCEN or Congress could institute a short delay or extension of deadlines prior to enforcing compliance.
State-Level Action:
Some states may consider creating their own Beneficial Information Reporting systems (for instance – New York’s new law that has a 1/1/2027 reporting due date), creating a modified state-level filing system.
Repeal and Redo:
If the CTA as currently enacted is ultimately held to be unconstitutional, it is highly likely that Congress could enact a modified and constitutionally permissible version of the law. The U.S. faces pressure from the international banking system to have sufficient beneficial ownership rules in place (similar to most other developed nations), and it seems probable that some modified version of the CTA would be enacted if the current version was ultimately held to be unconstitutional.
Modified Filing Requirements:
Given the impact of the CTA on small businesses in particular, it is possible that Congress enacts additional exemptions to apply to a larger swath of “Main Street” small businesses. Other possible changes could include turning the reporting into an annual filing requirement and extending the deadline timelines for updates and new companies.
Conclusion
The nationwide preliminary injunction against the CTA is a significant development, introducing uncertainty for small businesses and advisors. The CTA has not ultimately been determined as unconstitutional and its requirements may be reinstated depending on legal outcomes. Businesses should prepare for all scenarios, including a potential overturn of the injunction and compressed filing deadlines.
As the legal challenges progress, staying informed and ready to adapt is crucial. The future of Beneficial Ownership Information Reporting remains uncertain, and further updates will help guide the path forward for businesses and advisors.
