IMPORTANT UPDATE:
The Corporate Transparency Act Circus Continues
On December 26th, only three days after lifting the injunction of the United States District Court on enforcement of the Corporate Transparency Act (CTA), the Fifth Circuit Court of Appeals reinstated the nationwide injunction on enforcement of the CTA. The Fifth Circuit Court of Appeals is currently scheduled to hear oral argument on the case March 25, 2025.
Stand by because the Department of Justice could seek an emergency reconsideration of the reinstatement of the injunction on enforcement of the CTA requesting a decision before March 25, 2025.
Reporting companies should continue to monitor developments regarding reporting under the CTA given that there are numerous court challenges to the CTA which continue to work their way through the courts and the determination may ultimately be made by the Supreme Court.
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BOI January 1 Reporting Deadline Extended
Following a December 23 Federal Court of Appeals decision, most reporting companies are now required to file Beneficial Ownership Information (BOI) reports with FinCEN. To allow additional time for compliance, the Department of Treasury has extended the reporting deadline. For those with an initial deadline of January 1, 2025, the deadline has now been extended to January 13, 2025.
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BOI – Injunction Reversed
Important Information – the 5th Circuit Court of Appeals has reversed its previous rejection of FinCen’s appeal of the BOI injunction. This decision effectively lifts the injunction, reinstating the original filing deadline of January 1, 2025.
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Court Halts Beneficial Ownership Information (BOI) Reporting
As if things were not crazy enough, a federal district court in Texas has called the Corporate Transparency Act (CTA) which requires BOI reporting as “quasi-Orwellian” and is likely unconstitutional and issued an order prohibiting the enforcement of BOI reporting. According to the court, the injunction should apply nationally.
Under the injunction, the CTA and the BOI reporting rule cannot be enforced, and reporting companies need not comply with the January 1, 2025, reporting deadline pending a further order from the court.
The AICPA has recommended that those subject to the filing prior to the injunction who have not filed have all the necessary data ready should the injunction be lifted and filing requirements be reinstated. We urge you to stay updated on this issue. We cannot guarantee that we will be able to notify you in a timely manner if the reporting requirement is reinstated. If the government appeals, the case will be in the Fifth Circuit.
FYI – The FinCEN website is still open and accepting registrations for those who may want to go ahead and register while the legal battles continue. Businesses should monitor the developments closely given that potential penalties for willful failure to file are $591 a day up to $10,000 and two years in prison with similarly serious penalties for unauthorized disclosure.
Caution: This explanation is general in nature and should not be used for specific planning. Contact a tax professional for your specific planning needs.