BOI Filing – Still a Requirement? Treasury Department Doesn’t Think So

March 4, 2025 by Leave a comment

Treasury Department Enforcement:

The requirement to file beneficial ownership information introduced under the Corporate Transparency Act (CTA) has undergone several challenges since its announcement. Although it is still technically required, the Treasury Department announced on Sunday, March 2, 2025, that it will not be enforcing any penalties or fines imposed by the CTA for failure to file beneficial ownership information against U.S. citizens, domestic reporting companies, or their beneficial owners.

The Treasury Department specified that enforcement will not be sought regarding the current filing requirements, as well as forthcoming rule changes that take effect. This refers to the upcoming deadline for filing by March 21, 2025, announced by FinCEN after the government obtained a stay of the nationwide injunction and reinstated the reporting obligation.

Enforcement under the CTA for failure to report would have led to civil penalties of up to $500 for each day the violation continues or criminal penalties, including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI report may be held accountable for the failure. Now, it appears that the Treasury Department will not be enforcing such penalties.

However, certain foreign reporting companies may still be required to file. In its press release, the Treasury Department carved out an exception to the non-enforcement. It stated that:

“the Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.”

This suggests there may be different requirements on the horizon, differentiating between U.S. and foreign reporting companies. Depending on its implementation, this carve-out may face challenges for treating entities differently based on nationality. For now, it may be safe for non-U.S. companies that are registered to do business in the United States to continue planning to report BOI information by the current deadline of March 21, 2025, or at least prepare all necessary information for filing.

Ongoing Litigation Update:

We have previously reported on litigation arising from Texas (Texas Top Cop Shop, Inc. v. Bondi and Smith v. United States Department of the Treasury) regarding nationwide injunctions of the reporting requirement. In Smith, the court reinstated the CTA reporting obligation, creating the basis for the new March 21 deadline noted above. There are no new developments in these cases yet.

However, we have not reported on another case from Alabama and how it may impact future obligations. In March 2024, the federal district court concluded in National Small Business United v. Yellen that the CTA exceeds the Constitution’s limits on Congress’s power and enjoined the Department of the Treasury and FinCEN from enforcing the CTA against the plaintiffs. Included in this group are the National Small Business Association and its members. These individuals and entities were not required to report beneficial ownership information to FinCEN per the ruling, and continue to remain an exempted class.

Reminder: To Whom Does the CTA apply (Technically):

A beneficial owner is any individual who, directly or indirectly:

  • Exercises substantial control over the business; OR
  • Owns or controls at least 25 percent of the ownership interests of the business.

Beneficial ownership information reporting is not an annual requirement. Unless a company needs to update or correct information, a report only needs to be submitted once.

This reporting requirement applies to U.S. corporations and LLCs, as well as other forms of businesses organized under state or Tribal law.  It also applies to foreign businesses that register to do business in the United States (often this means registering with a state).  There is a list of exemptions but most of them are entities that have to register with the government under other laws. A common exemption is that for large businesses, who must meet all three of the following to be exempt from BOI reporting requirements:

  • Have more than 20 full-time domestic employees.
  • Have gross domestic receipts or sales exceed $5 million.
  • Have an operating presence at a physical office within the United States.

Takeaways:

The status of the BOI reporting requirement under the CTA remains controversial. Treasury Secretary Scott Bessen and President Trump endorsed the Department’s announcement that it will not enforce penalties. It appears that efforts are being made from multiple avenues to either stall or reverse this reporting requirement. For now, we encourage members to regularly check on the status of the requirements. Non-enforcement does not mean compliance obligations do not have to be met under the regulation. Therefore (and especially for foreign companies), it may be wise to prepare this information internally so that it is ready for filing once a final determination has been made.

Many businesses in the aerospace industry may be affected by this BOI reporting requirement. Enforcement for failure to report may mean onerous fees and could entail a felony charge. Ultimately, accurate record retention remains a key necessity for all businesses.

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BOI Reporting Requirement: January Update

January 27, 2025 by Leave a comment

The Beneficial Ownership Interest (BOI) reporting requirement is still suspended, but we are getting closer to potentially seeing it applied.

ASA has previously warned members about the reporting obligations that were originally set to take effect in January 2025. The Corporate Transparency Act (CTA) requires small businesses to report their BOI. ASA has also published an article outlining the reporting obligations and identifying who must submit the required information.

As a brief reminder, businesses are exempt from this obligation only if they meet all three of the following criteria:

  1. They have more than 20 full-time domestic employees.
  2. Their gross domestic receipts or sales exceed $5 million.
  3. They have an operating presence at a physical office within the United States.

This exemption generally applies to larger businesses. Therefore, many smaller businesses will be required to submit the necessary BOI information.

BOI reporting has been challenged in court through two separate cases. Our updates thus far have primarily focused on one case, Texas Top Cop Shop, Inc. v. Garland. Below is a timeline of the BOI obligations based on this legal challenge:

  • December 5, 2024: A Texas federal district court ordered an injunction on BOI reporting, suspending the obligation.
  • December 23, 2024: The 5th Circuit Court of Appeals reversed the injunction, reinstating BOI reporting. The court also scheduled expedited oral arguments for March 25, 2025.
  • December 26, 2024: The 5th Circuit’s Merit Panel reversed the previous reversal, reinstating the injunction. As a result, the reporting obligation was once again suspended.

The matter was subsequently brought before the Supreme Court, which issued its decision on Friday, January 23, 2025. The Court issued a stay on the December 5 injunction, which technically reinstated the BOI reporting obligation until the conclusion of the appeal in the 5th Circuit. In his concurring opinion, Justice Gorsuch suggested that the court should examine whether it is inappropriate for a a district court to issue universal injunctive relief (e.g. he seems to feel that trial courts should not be allowed to stay enforcement of a law across the entire country).

BOI reporting requirements remain suspended due to a decision in a separate case, Smith v. United States Department of the Treasury. On January 7, 2025, the U.S. District Court for the Northern District of Texas issued a nationwide injunction in this case, prohibiting enforcement of the CTA and suspending all reporting requirements under it, including BOI reporting.

This injunction drew on some analysis from the earlier case but also provided its own reasoning. The court granted the injunction based on its determination that Smith is likely to succeed on the merits of the challenge to the CTA. The court examined the constitutionality of the CTA and concluded that the Act would likely be found to exceed Congress’s power to regulate interstate commerce or other enumerated powers.

The Supreme Court did not comment on the CTA’s constitutionality or the likelihood of success for either party. Therefore, it remains unclear whether businesses will need to comply with the reporting obligation in the near future.

As a best practice, businesses may wish to maintain accurate ownership information internally. This ensures that, should the obligation to report arise, the necessary information is readily available to ensure compliance.

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Beneficial Ownership Information: Still On Hold

December 31, 2024 by Leave a comment

The Corporate Transparency Act’s requirement to file Beneficial Ownership Information (BOI) is back in the news.

For those who want to skip to the summary, the current status is that the BOI reporting requirement is still suspended pending a Fifth Circuit review.

But last week was really crazy, with the Court of Appeals reinstating the requirement for three days and then once again putting it on hold.

Recent highlights:

  • Congress issues the Corporate Transparency Act, which requires most US businesses to file BOI with the federal government by January 1, 2025.
  • December 3, 2024: US District Court for the Eastern District of Texas issues a nationwide injunction, halting enforcement of the requirement, suggesting that the requirement is likely to be unconstitutional.
  • December 23, 2024: US Court of Appeals for the Fifth Circuit lifts the injunction (“stays” the injunction) (a motions panel), suggesting the government was likely to prevail in defending the law (because the law is likely to be constitutional).
  • December 26, 2024: US Court of Appeals for the Fifth Circuit reverses itself (the merits panel), vacating its earlier order to preserve the injunction until after the case can be decided on the merits. The panel explained that it wanted to “to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments.”

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Texas Court Enjoins CTA – Suspending the Obligation to File Ownership Information

December 6, 2024 by Leave a comment

As we reported at the ASA Quality Committee meeting this week, a Federal Court in Texas has issued a preliminary injunction against the entire Corporate Transparency Act (CTA), effectively suspending the Beneficial Ownership Information (BOI) filing deadline.

The CTA had required businesses to file ownership information with the federal government. The information was supposed to be used to aid law enforcement in their investigations of issues ranging from money-laundering to export compliance.

The deadline for filing your BOI information was going to be January 1, 2025; however the filing requirement is now ON HOLD because of the preliminary injunction. This means that for now you do not have to file BOI.

The case is Texas Top Cop Shop, Inc., et al. v. Garland, et al., Case No. 4:24-cv-478 (E.D. Tex.). It is likely that there will be further developments from this case, as this is only a preliminary injunction. The preliminary injunction order was a whopping 79 pages long, so it is a great read for anyone looking to understand the court’s reasoning.

This is not the first case to say that the requirement is unconstitutional: National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.) did so earlier this year; but it is the first to issue a nationwide injunction blocking enforcement of the filing requirement.

Past ASA Blog Posts on this Subject:

Beneficial Ownership Reporting: What You Need to Know
Businesses are Now REQUIRED to File Ownership Information with the Federal Government
New Requirement to File Beneficial Ownership Information for Your Business

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Beneficial Ownership Reporting: What You Need to Know

November 18, 2024 by 3 Comments

The deadline for reporting Beneficial Ownership Information (BOI) is January 1, 2025. Make sure your company is in compliance!

The BOI reporting obligation arose under the Corporate Transparency Act (CTA), which was passed in 2020 as part of the National Defense Authorization Act for Fiscal Year 2021. U.S. corporations, LLCs, businesses organized under state law, and foreign businesses registered to conduct business in the United States must report Beneficial Ownership Information (BOI) about their beneficial owner through the Beneficial Ownership Information (BOI) E-Filing System.  

A beneficial owner is defined as anyone who:

  • Exercises substantial control over the business, or
  • Owns or controls at least 25% of the ownership interests.

Companies must report the following information about each beneficial owner:

  • Name;
  • Date of birth;
  • Address; and
  • The identifying number and issuer from either a non-expired U.S. driver’s license, a non-expired U.S. passport, or a non-expired identification document issued by a State (including a U.S. territory or possession), local government, or Indian tribe.  If none of those documents exist, a non-expired foreign passport can be used.  An image of the document must also be submitted. 

In addition, reporting companies created on or after January 1, 2024, are required to submit information about the individuals who formed the company (“company applicants”).

An exemption to the reporting requirement is available only for larger businesses. Businesses that meet all the following criteria are exempt from reporting:

  1. More than 20 full-time domestic employees;
  2. Gross domestic receipts or sales exceeding $5 million; and
  3. An operating presence at a physical office within the United States.

The reporting obligation will not require annual submissions.  Instead, once a report is filed, it only needs to be updated if there are changes in ownership or control.  Here is a breakdown of the key deadlines:

  • Existing businesses: Must report by January 1, 2025.
  • Businesses created in 2024: Have 90 days from their formation date to report.
  • Businesses created starting in 2025: Must report within 30 days.

Failing to comply with BOI reporting can lead to severe penalties.  Civil penalties can reach up to $500 for each day a violation continues, while criminal penalties may include fines up to $10,000 and potential imprisonment for up to two years.  Senior officers of the company could also be held accountable for any failures in reporting.

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Businesses are Now REQUIRED to File Ownership Information with the Federal Government

May 6, 2024 by Leave a comment

You may be required to file your company’s ownership/control information with the federal government. This requirement has been added to the law to help the government assess compliance obligations. For some ASA members, a large business exception may apply (see below), but many ASA members will be required to file.

In 2021, Congress enacted the Corporate Transparency Act (CTA). This law requires many companies doing business in the United States to report information about who ultimately owns or controls the business. The CTA was intended to prevent people with malicious intent from hiding the ownership of their U.S. entities to facilitate illegal operations. This has become a concern of many aviation manufacturers who worry about whether their sales might end up in Russia.

A quick history note – the CTA was originally passed in 2020 but it was part of the National Defense Authorization Act and President Trump vetoed that law. His veto was overridden on January 1, 2021 and the bill become Public Law No: 116-283.

Effective January 1, 2024, most businesses in the United States must report information about their beneficial owners. This information is reported to the the Financial Crimes Enforcement Network (FinCEN), which is a bureau within the Treasury Department.

A beneficial owner is any individual who, directly or indirectly:

  • Exercises substantial control over the business; OR
  • Owns or controls at least 25 percent of the ownership interests of the business.

This reporting requirement applies to U.S. corporations and LLCs, as well as other forms of businesses organized under state or Tribal law.  It also applies to foreign businesses that register to do business in the United States (often this means registering with a state).  There is a list of exemptions but most of them are entities that have to register with the government under other laws.

Exception: There is an exemption for large businesses (but not for small businesses).  The large business exemption applies to businesses with (1) more than 20 full time domestic employees, (2) gross domestic receipts exceeding $5,000,000, and (3) an operating presence at a physical office within the United States (please see the regulations for a complete list of the requirements for this exemption). This exception may apply to many of MARPA’s members 

Beneficial ownership information reporting is not an annual requirement. Unless a company needs to update or correct information, a report only needs to be submitted once.

Reports are filed through the Beneficial Ownership Information (BOI) E-Filing System.

The deadline for reporting for existing businesses is January 1, 2025.  Businesses created in 2024 will have 90 days to register under the BOI system and those that are subsequently created – starting in 2025 – will have 30 days for registration.

Failure to report can lead to civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI report may be held accountable for the failure.

The BOI information is not expected to be publicly available, but it is expected to be available to law enforcement agencies.

Useful Resources:

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New Requirement to File Beneficial Ownership Information for Your Business

April 3, 2024 by 1 Comment

You are now required to file your company’s ownership/control information with the federal government.

In 2021, Congress enacted the Corporate Transparency Act (CTA). This law requires many companies doing business in the United States to report information about who ultimately owns or controls the business. The CTA was intended to prevent people with malicious intent from hiding the ownership of their U.S. entities to facilitate illegal operations. This has become a concern of many aircraft parts distributors who worry about whether their sales might end up in Russia.

Effective January 1, 2024, most businesses in the United States must report information about their beneficial owners. This information is reported to the the Financial Crimes Enforcement Network (FinCEN), which is a bureau within the Treasury Department.

A beneficial owner is any individual who, directly or indirectly:

  • Exercises substantial control over the business; OR
  • Owns or controls at least 25 percent of the ownership interests of the business.

This reporting requirement applies to U.S. corporations and LLCs, as well as other forms of businesses organized under state or Tribal law.  It also applies to foreign businesses that register to do business in the United States (often this means registering with a state).  There is a list of exemptions but most of them are entities that have to register with the government under other laws.

You might ask whether there is an exemption for small businesses.  There is not.  In fact, there is an exemption for large businesses – not for small businesses.  The large business exemption applies to businesses with more than 20 full time domestic employees and gross domestic receipts exceeding $5,000,000 (please see the regulations for a complete list of the requirements for this exemption). 

Beneficial ownership information reporting is not an annual requirement. Unless a company needs to update or correct information, a report only needs to be submitted once.

Reports are filed through the Beneficial Ownership Information (BOI) E-Filing System.

The deadline for reporting for existing businesses is January 1, 2025.  Businesses created in 2024 will have 90 days to register under the BOI system and those created starting in 2025 will have 30 days for registration.

Failure to report can lead to civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI report may be held accountable for the failure.

Useful Resources:

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