Business Alert: BOI Reporting Requirements Have Been Suspended For Now

If you’re a small business owner who was preparing to meet the Beneficial Ownership Information (BOI) reporting requirements of the Corporate Transparency Act (CTA), there’s important news on the horizon. A recent court ruling has suspended BOI compliance deadlines nationwide, creating a pause in enforcement. But with ongoing legal battles, there’s still uncertainty about the future of these requirements.

Here’s everything you need to know about the suspension, the implications for your business, and what might happen next.

What is BOI Reporting?

Beneficial Ownership Information (BOI) reporting requires small businesses to disclose details about their “beneficial owners” to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). These are typically individuals who own or control the company. The purpose of BOI reporting is to crack down on activities like fraud and money laundering, ensuring greater transparency across the corporate landscape.

Under the CTA, which went into effect on January 1, 2024, different deadlines applied based on when your business was created or registered:

• Formed before January 1, 2024: Deadline was January 1, 2025.
• Formed between January 1, 2024, and January 1, 2025: Businesses were required to report within 90 days of their formal registration.
• Formed after January 1, 2025: BOI reporting was mandated within 30 days of registration.

Failure to comply with these reporting deadlines could lead to civil or criminal penalties. However, with the recent legal developments, those requirements are no longer being enforced—for now.

How We Got Here

The Corporate Transparency Act was created as a measure to increase accountability and transparency in commercial activities, primarily to prevent illegal activities that exploit corporate structures. Yet, it hasn’t been immune to controversy.

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction that halted BOI reporting requirements. This ruling temporarily:

1. Blocks the enforcement of the CTA and its BOI reporting regulations.
2. Pauses all compliance deadlines for reporting entities.

The U.S. Department of Justice wasted no time filing an appeal on behalf of the Treasury Department just days later, on December 5, 2024. Still, this injunction remains in effect while the case moves through the courts. Businesses are no longer required to submit BOI reports or face penalties during this time.

FinCEN’s Response

FinCEN, responsible for implementing and enforcing these regulations, has stated on its website:

“Reporting companies are not currently required to file their beneficial ownership information … and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect.”

However, it’s clear that FinCEN stands behind the constitutionality of the Corporate Transparency Act, and the suspension could be temporary depending on future legal proceedings.

This marks the latest chapter in an ongoing legal saga. Two prior cases upheld the BOI reporting requirements, while another decision recognized the unconstitutional nature of the CTA, though only for specific plaintiffs. For the first time in this legal battle, the injunction casts doubt over the CTA’s compliance deadlines for all businesses nationwide.

What Does This Mean for You?

For the time being, your business is not required to submit BOI reports, and there are no penalties for failing to meet the deadlines suspended by the court. This applies across the board for entities subject to the original BOI compliance requirements.

However, FinCEN does allow businesses to voluntarily submit BOI reports during this pause. While not mandatory, voluntary filing may appeal to businesses seeking to stay proactive and aligned with eventual regulatory expectations.

At the same time, it’s important to stay informed and prepared for the possibility that the injunction could be overturned, restoring original deadlines.

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What Small Businesses Should Know Moving Forward

1. Get Up to Speed on Your Beneficial Owners

If you haven’t already, take this opportunity to identify who qualifies as beneficial owners within your organization. This includes anyone who:

• Owns at least 25% of the company, or
• Exercises significant control over the business.

Having this information on hand will save you time and effort in the future if compliance deadlines are reinstated.

2. Consider Voluntary Reporting

FinCEN has made it clear that voluntary BOI reports are welcome. This might be a good option for businesses wanting to position themselves as compliant ahead of time. If nothing else, it allows companies to familiarize themselves with the reporting process.

3. Stay on Top of Legal Updates

The situation is still evolving. Keep an eye on legal proceedings as well as updates from FinCEN to ensure you’re preparing for any changes. Consider working with a trusted advisor who can track these developments on your behalf.

4. Review Your Compliance Practices

While BOI reporting is just one piece of regulatory compliance, use this time to streamline other areas of your business operations. Strengthening general compliance now can save you headaches down the road.

The Bigger Picture for Small Business Owners

The future of BOI reporting remains uncertain. While the recent injunction has provided some temporary relief for businesses, the underlying goals of the Corporate Transparency Act—transparency, accountability, and financial oversight—are unlikely to fade away.

Remember, compliance doesn’t have to be overwhelming. At SD Mayer, our team of experts is dedicated to helping businesses like yours stay compliant and thrive. Whether it’s adapting to changing regulations or finding innovative ways to streamline processes, we’ve got you covered.

Have questions about BOI reporting or other compliance issues? Get in touch with us today—we’re here to help.