
On January 23, 2025, the U.S. Supreme Court granted the government's application for a stay of an injunction issued by the U.S. District Court for the Eastern District of Texas in Texas Top Cop Shop v. Garland. This injunction had previously blocked enforcement of the Corporate Transparency Act (CTA) and its implementing regulation, the Beneficial Ownership Information (BOI) Rule. The CTA mandates that certain entities, known as Reporting Companies, disclose information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).
However, despite the Supreme Court's action, another legal development has kept the BOI reporting requirements on hold. On January 7, 2025, in Smith v. U.S. Department of the Treasury, a different judge from the same district court issued a preliminary injunction and stayed the effective date of the BOI Rule nationwide. This means that, as of now, the BOI Rule is paused across the country.
In response to these developments, FinCEN released a statement on January 24, 2025, clarifying that, due to the injunction in the Smith case, reporting companies are not currently required to file beneficial ownership information. Companies will not face liability for failing to submit BOI reports while this order remains in effect. However, FinCEN noted that companies may choose to voluntarily submit their BOI reports during this period.
Implications for Businesses
While the BOI reporting requirements are temporarily suspended, it's crucial for businesses to stay informed and prepared. The legal landscape surrounding the CTA and BOI Rule is evolving, and the current pause may be lifted depending on future court decisions. Oral arguments in the Texas Top Cop Shop case are scheduled for March 25, 2025, which could influence the status of the BOI Rule.
Recommendations
✅ Stay Informed: Regularly monitor updates from FinCEN and legal advisories to remain aware of any changes to the BOI reporting requirements.
✅ Prepare Documentation: Even though reporting is not currently mandatory, consider gathering the necessary information about your company's beneficial owners. This proactive approach will facilitate compliance if the reporting requirements are reinstated.
✅ Consult Professionals: Engage with legal and accounting experts to understand how these developments impact your specific situation and to ensure readiness for potential compliance obligations.
By staying vigilant and prepared, businesses can navigate the uncertainties surrounding the BOI reporting requirements and ensure compliance when necessary.
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