The Beneficial Ownership Information reporting landscape just got more confusing. The Fifth Circuit Court of Appeals has overturned the district court injunction that had temporarily blocked BOI reporting, reinstating the requirement. If you were waiting on the sidelines, the obligation is back. Here is what happened and what it means for your compliance timeline.
The Legal Ping-Pong
On December 3, a federal judge in Texas issued a nationwide injunction blocking FinCEN from enforcing BOI reporting under the Corporate Transparency Act, ruling that the law likely exceeded Congress’s enumerated powers. Business owners exhaled. Then on December 23, the Fifth Circuit reversed that decision, dissolving the injunction and restoring the reporting requirement. The court found that the CTA was a valid exercise of congressional authority under the Commerce Clause and anti-money laundering frameworks.
Where This Leaves You
As of the Fifth Circuit’s ruling, BOI reporting is enforceable. The original deadline of January 1, 2025 for companies formed before 2024 has passed or is imminent. FinCEN has not yet announced whether it will grant additional time given the legal uncertainty. If you have not filed, the prudent course is to prepare your filing immediately so you can submit as soon as any deadline extension is confirmed or the original deadline is enforced.
The Case Is Not Over
The plaintiffs are expected to appeal to the Supreme Court, and other legal challenges to the CTA are pending in different circuits. It is possible that another injunction could be issued, or that the Supreme Court could take up the question of the CTA’s constitutionality. But waiting for a favorable ruling is a gamble. If no further stay is granted, non-filers face penalties of $591 per day.
Practical Next Steps
Gather beneficial owner information for your entity now: full legal names, dates of birth, residential addresses, and government-issued photo ID for each person who owns 25% or more or exercises substantial control. If you have multiple entities, each one requires a separate filing. Having this information ready means you can file quickly regardless of how the legal situation evolves.
This is a situation where being prepared costs you nothing, but being unprepared could cost you significantly. Get your information together and be ready to file.