The ongoing legal battle over the Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) reporting requirements has seen significant developments:
- Dec. 3, 2024: A nationwide injunction against the CTA was issued by the U.S. District Court for the Eastern District of Texas.
- Dec. 23, 2024: The Fifth Circuit Court of Appeals stayed the injunction, reinstating the CTA.
- Dec. 26, 2024: The Fifth Circuit vacated its earlier stay, potentially reinstating the injunction.
This legal turbulence has created uncertainty for businesses and entities subject to BOI reporting requirements. Key points include:
- Uncertain compliance obligations: Conflicting rulings make it difficult for entities to determine their next steps.
- Deadline extensions: FinCEN extended the BOI reporting deadline to Jan. 13, 2025, but this may change based on court outcomes.
- Expedited appeals process: A final decision is expected soon but remains unpredictable.
Guidance for affected entities
- Stay updated: Monitor legal and regulatory updates closely.
- Prepare for compliance: Begin drafting BOI reports to ensure readiness if the CTA is upheld.
- Consult experts: Legal counsel can clarify obligations amidst this complex situation.
UPDATE
American Farm Bureau Federation President Zippy Duvall criticized the ongoing legal battles over the BOI reporting requirements. “Farm Bureau appreciates the court’s recognition that a last-minute reinstatement of reporting requirements caused an unwelcome scramble for small businesses, including more than 230,000 farmers,” Duvall said. He emphasized that the legal uncertainty and poor government outreach had left many in the agriculture sector confused. In a third about-face, late last night, the court reversed that order until arguments can be heard, delaying the reporting requirement indefinitely.
The BOI rule imposes steep penalties for non-compliance, including fines of up to $10,000, civil penalties of $591 per day, and potential felony charges with up to two years of imprisonment.
For more details, access the latest court order here or a Market Intel analysis on the BOI requirements here.