As happens with legislation that’s making its way through the court system, sometimes a law is enjoined, and then other times, the injunction is stayed or held in abeyance.
As we wrote about mere weeks ago, the Corporate Transparency Act [CTA] – which requires small businesses to disclose their owners and the owners’ personal information – had been enjoined [stopped] by a federal district court in Texas. That court stopped the law from being effective across the entire United States.
The feds took an immediate appeal and – at least for now – the Fifth Circuit Court of Appeals has stayed the injunction.
What’s that mean?
It means that the CTA is back in effect, and small businesses must file their BOI (business owner information) soon.
Guidance for Small Businesses
As we shared with you a year ago, if you’re a small for-profit company with fewer than 20 employees, you’ve got to report your BOI. Required information includes:
- the owner’s full legal name;
- date of birth;
- current residence address; and
- a unique identifying number from an acceptable identification document, including an image of the document (e.g., valid U.S. passport, State or local government ID, or driver’s license).
This requirement applies to all owners, even those with a minority stake of at least 25%.
Timing for Small Businesses
In light of the off-again-on-again nature of the statute, and the fact that the ruling came during the week most businesses and their owners are celebrating Christmas, Hanukkah, and Kwanzaa, the federal agency pushed back the January 1st deadline to January 13, 2025 for companies formed before January 1, 2024. There are some other, rolling, deadlines too, according to the federal Financial Crimes Enforcement Network [FinCEN]:
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Reporting companies created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.
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Reporting companies created or registered in the United States on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.
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Reporting companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025. These companies should abide by whichever deadline falls later.
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Reporting companies that are created or registered in the United States on or after January 1, 2025 have 30 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.
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As indicated in the alert titled “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.),” Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)—namely, Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024)—are not currently required to report their beneficial ownership information to FinCEN at this time.
The FinCen website is the best place to find up-to-the-minute information, including notices regarding fraudsters who are trying to take advantage of small business owners. Consequently, be certain to vet any vendor you decide to hire to help with your filing.
What’s Next?
Well, there’s a new federal administration coming into power on January 20, 2025. The Treasury Department under a Trump Administration may have a different view about the need for BOI than the Biden Administration had.
So the watchword here is stay tuned. We’ll continue to report as developments merit.
In the meantime, for now, with the limited exception of companies directly involved in the Texas litigation, the CTA is back on, and companies are required to comply with the filing requirements.
Always feel free to reach out to our team of attorneys if you have questions. We’re here to help.
