FinCEN Extends BOI Reporting Deadline to January 13, 2025
In a recent, crucial announcement for US businesses, the Financial Crimes Enforcement Network (FinCEN) extended the deadline for most reporting companies to submit their Beneficial Ownership Information (BOI) reports until January 13, 2025. The announcement follows a recent ruling in court that reinstated the reporting requirement after an injunction from the Fifth Circuit Court of Appeals was lifted.
Court Ruling and Immediate Impact
On December 3, 2024, an injunction was issued by a district court in the case of Texas Top Cop Shop, Inc. v. Garland, prohibiting the enforcement of the BOI reporting requirements under the Corporate Transparency Act (CTA). The Department of Justice had made a rush appeal against this decision, and on December 23, the Fifth Circuit Court was in favor of lifting the injunction, granting the motion for stay by the DOJ. This has reset the deadline for BOI reporting for companies with such filing deadlines between today and January 1, 2025.
Key Deadlines for Reporting Companies
The extension is applicable to reporting companies that were created or registered in the U.S. prior to January 1, 2024, and those whose deadlines have been delayed by the injunction. Specifically, FinCEN has clarified the following deadlines for filing BOI:
For companies created or registered before January 1, 2024: The filing deadline has been extended to January 13, 2025. These companies would have otherwise been required to submit their initial BOI reports by January 1, 2025.
For companies created or registered between September 4, 2024, and December 23, 2024: These companies now have until January 13, 2025, to submit their BOI reports, instead of the original deadline.
For companies created or registered between December 3, 2024, and December 23, 2024: These companies are given an additional 21 days from their original filing deadline to comply with BOI reporting requirements. For companies that qualify for disaster relief: These entities may have additional extensions beyond January 13, 2025, and should follow the later of the deadlines.
For new companies formed after January 1, 2025: Companies created or registered on or after this date will have 30 days to file their BOI reports once they receive notice that their formation or registration is effective.
The CTA and BOI Reporting Requirements
Certain entities are required to disclose their beneficial owners as per the CTA or Corporate Transparency Act passed by Congress in 2021 as part of a larger anti-money-laundering bill. Beneficial owners include individuals who exercise substantial control over a company or own at least 25% of its shares. The CTA requires the disclosure of "applicants"-those individuals responsible for submitting the formation paperwork for a company-to entities formed after January 1, 2024.
The CTA pushes for transparency and puts in place measures to mitigate financial crime such as money laundering and tax evasion. FinCEN's enforcement of the requirements of reporting is important to accomplish these purposes.
Read article in detail to know about penalties
Legislative Developments and Delays
While FinCEN’s extension offers some relief, the issue of BOI reporting deadlines has been the topic of debate. Organizations like the American Institute of Certified Public Accountants (AICPA) and state CPA societies have lobbied for delays in the reporting deadlines, citing concerns about compliance challenges. Last week, a one-year delay was included in a proposed spending bill by the House of Representatives. However, the version passed by Congress late Friday, which aimed to avert a government shutdown, did not include provisions related to the BOI reporting deadline. The situation prevails, with a still-on-going litigation scenario surrounding the C.T.A. and the BOI reporting rules. The Fifth Circuit's recent ruling suggests that the government is about to win in defending the constitutionality of the C.T.A., yet further updates may still be on the horizon as the case unfolds.
What Should Businesses Do Now?
Now that the deadline for compliance has been extended until January 13, 2025, businesses, especially those subject to BOI reporting under the CTA, should start taking steps to ensure compliance with their regulations. They should review their ownership structures, collate the necessary beneficial owner information, and submit such reports to FinCEN before this new deadline.
These have included ongoing updates and subsequent guidance on the matters from FinCEN to businesses trying to require and understand the new requirements, which are also encouraged to follow the latest developments through other means such as those provided by the AICPA's BOI reporting resource center. With the ever-changing legal environment, it is crucial that companies remain alert and ready for upcoming developments regarding reporting under the CTA. For more updates contact EA@aifundservices.com
