UPDATE as of 12/3/2024
Court Blocks BOI Reporting Requirements Nationwide
On December 3, 2024, the U.S. District Court for the Eastern District of Texas granted a preliminary injunction in the case Texas Top Cop Shop, Inc., et al. v. Garland, et al., blocking the U.S. Department of Treasury from enforcing the CTA’s BOI reporting requirements.
This ruling is a major development for small businesses nationwide. As noted by Beth Milito, Executive Director of NFIB’s Small Business Legal Center, this decision provides a crucial reprieve for small business owners just weeks before the January 1, 2025, reporting deadline.
What This Means for You
For now, enforcement of the BOI reporting requirements has been halted, meaning small businesses are no longer obligated to submit their BOI reports until further notice. The court’s decision applies nationwide, so all businesses that would have been subject to the rule are impacted.
Why This Matters
NFIB’s lawsuit challenges the CTA as unconstitutional, arguing that it:
•Exceeds Congress’s authority over the states.
•Violates the First Amendment right of anonymous association and improperly compels speech.
•Contradicts the Fourth Amendment by mandating the disclosure of private information.
While this preliminary injunction provides temporary relief, the case could still proceed through the appeals process.
What You Should Do Now
1.Pause BOI Reporting Preparations: You are not required to submit a BOI report at this time.
2.Stay Updated: We will continue to monitor developments in this case and provide updates if the injunction is lifted or new guidance is issued.
Originial Post Below
Don’t Forget the BOI Filing Requirement: What You Need to Know Before Year-End
As the year comes to a close, many small business owners are wrapping up their financials and preparing for tax season. However, one important filing requirement that often slips under the radar is the Beneficial Ownership Information (BOI) reporting. This requirement, which was introduced under the Corporate Transparency Act (CTA), mandates that certain businesses file information about their beneficial owners with the Financial Crimes Enforcement Network (FinCEN). If your business is required to comply, it’s essential to submit your BOI report by the end of this year to avoid penalties.
Here’s everything you need to know about the BOI filing requirement and how to ensure you’re compliant:
What is BOI Reporting?
The Beneficial Ownership Information (BOI) report is a filing that identifies the individuals who ultimately own or control a company. The purpose of this requirement is to increase transparency and combat illicit activities like money laundering, terrorist financing, and other financial crimes. The information filed with FinCEN helps authorities track who is behind businesses, especially those that may not be visible in traditional financial transactions.
Who Needs to File the BOI Report?
Not all businesses are required to file a BOI report. Generally, the following types of entities are required to file:
- Corporations, limited liability companies (LLCs), and similar entities created or registered to do business in the U.S.
- Entities that are not large operating companies, regulated by a government agency, or otherwise exempt from this rule.
The BOI requirement primarily applies to small to medium-sized businesses, and large operating companies (those with more than 20 full-time employees, more than $5 million in gross receipts, and a physical office in the U.S.) are exempt from filing.
If your business falls into one of these categories, you’ll need to submit the report by January 1, 2025 (though earlier filings are recommended, particularly before year-end to avoid penalties).
What Information Do You Need to Provide?
The BOI report requires you to provide detailed information about your business’s beneficial owners. A beneficial owner is someone who, directly or indirectly, owns or controls at least 25% of the company’s equity or has substantial control over its operations. The information to include for each beneficial owner is as follows:
- Full legal name
- Date of birth
- Residential or business address
- A unique identifying number (e.g., passport number or driver’s license number) along with a photo of the identification.
Deadlines and Penalties
The first filing deadline for the BOI report is January 1, 2025, but you can submit your filing earlier, ideally before the end of this year. Missing the deadline could result in substantial penalties, including:
- Up to $500 per day for failing to file the required report.
- Up to $10,000 in penalties for willfully providing false information or failing to update the report within the required time frame.
How to File the BOI Report
The BOI report must be filed electronically through FinCEN's online portal. If you’re unsure whether your business is required to file, or need help gathering the necessary information, it may be wise to consult with a CPA or a legal professional who specializes in compliance.
Steps You Can Take Now:
- Review your business structure: If you’re unsure whether your company needs to file a BOI report, consult with your accountant or legal advisor to determine your obligations.
- Gather the required information: Collect the names, addresses, and identification numbers of your beneficial owners.
- File early: Aim to submit your BOI report by December 31, 2024, to avoid penalties and ensure you're compliant ahead of the January 1, 2025, deadline.
- Stay updated: Monitor any changes to your business or beneficial ownership information and file updates promptly if any information changes.
Conclusion
As the year-end approaches, don't let the BOI filing requirement slip through the cracks. Understanding whether your business is subject to this filing and completing it before the deadline will help you avoid costly penalties and ensure compliance with federal regulations.
Need help with the BOI filing or other year-end tasks? Contact me today to ensure your business is on track for a smooth and compliant year-end!