On December 3, 2024, a federal district court in Texas issued an order granting a nationwide preliminary injunction that enjoins the Corporate Transparency Act (CTA), including enforcement of BOI reporting requirements, and stays all deadlines to comply with the CTA’s reporting requirements.
According to FinCen, reporting companies are not currently required to file their beneficial ownership information and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect.
Nevertheless, reporting companies may continue to voluntarily submit beneficial ownership information reports. The Department of Justice filed a Notice of Appeal on December 5, 2024.
BOI filing is a one-time information return required for non-exempt reporting companies and originally had a December 31 filing deadline. There are two types of reporting companies:
- Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
- Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.
The type of entity subject to the requirement is not limited to companies. For example, if a trust is created in a U.S. jurisdiction that requires the filing of a document with the secretary of state or similar office to be created or registered, then it is a reporting company unless an exemption applies.
There are 23 types of exempt entities, including banks, credit unions, public utilities, inactive entities, tax exempt entities and others.
There is no minimum size requirement; for example, a single member LLC would be subject to the reporting requirement if no exemption applies.
While mandatory reporting is on hold, reporting companies may wish to voluntarily comply in light of the appeal.
Palmetto Global Tax Services LLC focuses on international tax and information return reporting.
