We last visited the pending January 1, 2025, deadline to file the new Beneficial Ownership Information (“BOI”) report in my article, With Deadline Looming, FINCEN’s Beneficial Ownership Information Reporting Is A Hot Mess (Dec. 9, 2024). At that time, a U.S. District Court had issued a nationwide preliminary injunction prohibiting FINCEN from enforcing the BOI filing requirement. The article warned that the Treasury Department would be taking an appeal and that it was entirely possible that the preliminary injunction would be lifted.
And that is exactly what happened. The U.S. Fifth Circuit Court of Appeals in Texas Top Cop Shop, Inc. v. Garland, 5th Cir. Appeal No. 24-40792 (Dec. 23, 2024), has reversed the U.S. District Court and dissolved the preliminary injunction. The bottom line is that the BOI filings are now due by January 13, 2025, including a 12-day extension just granted by FINCEN.
The Fifth Circuit’s opinion is very short and you can read it for yourself here. The most interesting portion of the Fifth Circuit’s opinion is the discussion that the Corporate Transparency Act, which gives rise to the FINCIN BOI requirements, is very likely a constitutional exercise of Congress’ powers under the Commerce Clause. The opinion of the U.S. District Court was highly questionable on this point as the U.S. Supreme Court has traditionally recognized that Congress has broad powers to regulate those things which have an effect on interstate commerce. Since the CTA operates to gather information to fight money laundering, the financing of terrorism, tax fraud and other crimes, it seems to be a very safe exercise of the Commerce Clause powers.
Note that there will be additional challenges to the CTA, including in this same case, on a variety of grounds including the Treasury Department’s alleged failure to abide by the Administrative Procedures Act and whether the CTA might in particular cases violate certain constitutional protections under the First and Fourth Amendments. Those challenges are for another day, however.
The confusion regarding the preliminary injunction has caused FINCEN to move the deadline to January 13, 2025, according to the following statement:
“In light of a December 23, 2024, federal Court of Appeals decision, reporting companies, except as indicated below, are once again required to file beneficial ownership information with FinCEN. However, because the Department of the Treasury recognizes that reporting companies may need additional time to comply given the period when the preliminary injunction had been in effect, we have extended the reporting deadline as follows:
- Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)
- Reporting companies created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.
- Reporting companies created or registered in the United States on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.
- Reporting companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025. These companies should abide by whichever deadline falls later.
- Reporting companies that are created or registered in the United States on or after January 1, 2025 have 30 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.
- As indicated in the alert titled “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)”, Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)—namely, Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024)—are not currently required to report their beneficial ownership information to FinCEN at this time.
“On Tuesday, December 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.), the U.S. District Court for the Eastern District of Texas, Sherman Division, issued an order granting a nationwide preliminary injunction. On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit granted a stay of the district court’s preliminary injunction enjoining the Corporate Transparency Act (CTA) entered in the case of Texas Top Cop Shop, Inc. v. Garland, pending the outcome of the Department of the Treasury’s ongoing appeal of the district court’s order. Texas Top Cop Shop is only one of several cases that have challenged the CTA pending before courts around the country. Several district courts have denied requests to enjoin the CTA, ruling in favor of the Department of the Treasury. The government continues to believe—consistent with the conclusions of the U.S. District Courts for the Eastern District of Virginia and the District of Oregon—that the CTA is constitutional. For that reason, the Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024 and separately sought of stay of the injunction pending that appeal with the district court and the U.S. Court of Appeals for the Fifth Circuit.”
So, if you are required to file and have not done so yet, the time is here to ― in the famous words of Daniel Lawrence Whitney a/k/a Larry the Cable Guy ― get-r-done.
Read the full article here
