Dec 30, 2024

UPDATED--Season's Greetings: BOI Rules Reversed Again

All over the business world, accountants, lawyers, financial executives and journalists have been scrambling to keep up with the latest soap opera in the financial community: what's happening with the Corporate Transparency Act and its ownership reporting rules.

 

The key message: As of Dec. 26, the CTA's BOI reporting requirements are suspended indefinitely. Affected businesses can breath a sigh of relief.

How did we get here?

In brief: The much-debated CTA imposed heavy reporting requirements on a wide range of companies, starting in 2025. The businesses had to report beneficial ownership information to the Financial Crimes Reporting Network. But then we get to the back-and-forth:

  • On Dec. 3, a federal court issued an injunction suspending the law. The reporting requirement was put on hold.
  • On Dec. 23, the Fifth Circuit Court overruled the original federal ruling, putting the CTA back in action. As the AICPA said on its website: "On Dec. 23, 2024, the Fifth Circuit Court lifted the injunction, allowing FinCEN to enforce BOI reporting."
  • On Dec. 26, the Fifth Circuit apparently had a change of heart and went back to suspending the requirements. So there is currently no mandate to file BOI reports.

FinCEN confirmed this on Dec. 27 with the following statement:

On December 26, 2024, however, a different panel of the U.S. Court of Appeals for the Fifth Circuit issued an order vacating the Court’s December 23, 2024 order granting a stay of the preliminary injunction. Accordingly, as of December 26, 2024, the injunction issued by the district court in Texas Top Cop Shop, Inc. v. Garland is in effect and reporting companies are not currently required to file beneficial ownership information with FinCEN.

Why did the court "relent"?

In a short statement, the Fifth Circuit wrote that "in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments, that part of the motions-panel order granting the Government’s motion to stay the district court’s preliminary injunction enjoining enforcement of the CTA and the Reporting Rule is VACATED."

However, this is not necessarily the last word. There's no certainty when the court will make a more permanent ruling. Congress could even decide to repeal the law. Because changes have been happening so quickly, be sure to keep in touch with your financial and legal advisors.

 ©2024


 

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