Beneficial Ownership Information Reporting Back On; FinCEN Extends Deadline
February 20, 2025
Beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) are once again back in effect following a U.S. district court ruling in a Texas case.
Following the ruling, the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) issued an alert announcing a new deadline of March 21, 2025, for most companies to file an initial, updated and/or corrected BOI report. The agency said it will provide an update before then of any further modification of the deadline, recognizing that reporting companies may need additional time to comply with their BOI reporting obligations once this update is provided.
FinCEN also announced it intends to initiate a process this year to revise BOI reporting rules to reduce the burden on lower-risk entities, including many U.S. small businesses.
On Jan. 7, the U.S. District Court for the Eastern District of Texas issued an order in the case Smith, et al. v. U.S. Department of the Treasury, et al staying FinCEN’s regulations implementing the BOI reporting requirements, precluding FinCEN from requiring BOI reporting or otherwise enforcing the CTA’s requirements. On Feb. 5, 2025, the U.S. Department of Justice—on behalf of Treasury—filed a notice of appeal of the district court’s order and, in parallel, requested a stay of the order during the appeal. On Feb. 18, the court agreed to stay its Jan. 7 order until the appeal is completed.
The motion was granted in light of the U.S. Supreme Court's order of Jan. 23, 2025, in McHenry v Texas Top Cop Shop. Inc., granting the government's application for a stay. As a result, the nationwide injunction that prohibited enforcement of FinCEN's BOI reporting rules no longer applies, and the reporting of BOI is once again required.
The rule requires many companies to report information to the U.S. government about the individuals who ultimately own or control the company. ALTA held a webinar that detailed which companies would need to comply with the reporting rule.
Under the law, most incorporated business entities that existed before 2024 must file their ownership and control information with FinCEN. The agency estimates 32.6 million U.S. businesses will need to disclose beneficial ownership information or face penalties, as will an estimated 5 million new businesses incorporated annually.
ALTA continues to work with FinCEN and lawmakers on Capitol Hill to address concerns with the Residential Real Estate Reporting Rule that was finalized as part of the Corporate Transparency Act.
Contact ALTA at 202-296-3671 or [email protected].