The Corporate Transparency Act (CTA) had set out U.S. federal laws requiring most U.S. entities (including corporations, partnerships and limited liability companies) and some non-U.S. entities to file a Beneficial Ownership Information Report (BOIR). The BOIR was to be filed with the Financial Crimes Enforcement Network (FinCEN), which is the same government agency that administers “FBAR” filings. In this report, filers were required to disclose certain information about the entity, including any ultimate individual owners with an ownership interest of 25% or more and individuals that exercise substantial control (i.e., decision-making power). The alleged purpose of this law was “to combat bad actors’ ability to cloak their criminal activities in a veil of corporate anonymity.”
The BOIR was generally a one-time filing, with updated reports only required when there was a change to information disclosed on the original filing. For entities formed prior to January 1, 2024, the due date for this report was January 1, 2025. Entities formed during 2024 generally had a due date of 90 days after formation. For “willful” violations of this requirement, FinCEN indicated they may impose harsh penalties.
Suspension of filing requirement
On December 3, 2024, the U.S. District Court for the Eastern District issued an injunction suspending the enforcement of the CTA (and thus the requirement to file BOIR’s), in short, on the grounds that the CTA is unconstitutional. As expected, the Department of Justice (acting in conjunction with FinCEN) swiftly filed a notice of appeal seeking a reversal of this injunction.
While this injunction is in effect, FinCEN is unable to enforce this filing requirement or levy any penalties for non-compliance.
GG Observations
Reporting companies that have not yet filed their BOIR’s should closely monitor the status of this issue with the Court and for further guidance from FinCEN if the filing requirement is reinstated. Please contact us should you have any questions or concerns.
