Beneficial Ownership Information Filing Injunction Lifted: What It Means for Small Businesses

On December 23, 2024, the Fifth Circuit lifted the injunction (Texas Top Cop Shop Inc. v. Garland, No. 4:24-CV-478) that had temporarily paused the Beneficial Ownership Information (BOI) reporting requirements under the Corporate Transparency Act (CTA). With this decision, the January 1, 2025 deadline has been extended to January 13, 2025 leaving many small business owners with only a short time to ensure compliance. Here’s what you need to know about this critical update.

The injunction had temporarily delayed the implementation of the BOI reporting requirements due to concerns raised by affected businesses and industry groups. However, the Department of Justice filed a notice of appeal two days after the injunction. The federal court’s recent decision emphasized the necessity of these rules to promote financial transparency and protect against fraudulent activities. As a result, the reporting requirements are back on track, and businesses must prepare to meet the looming deadline January 1, 2025.

For companies created prior to 2024, the obligation to submit initial beneficial ownership information (BOI) reports to the Financial Crimes Enforcement Network (FinCEN) before the January 13. 2025, deadline is, again, effective. For companies created in 2024, the initial BOI report is due within 90 days of formation. Filing promptly will help you avoid noncompliance penalties, which can include fines and even criminal charges. Currently, failure to comply with BOI reporting requirements can result in significant penalties:

• Civil fines of $500 per day for late filings

• Criminal penalties of up to $10,000 and imprisonment for up to two years for willful violations

  
  

Don’t wait until the last minute to address your reporting obligations—take action now to avoid these consequences. If you have questions about your reporting obligations or need assistance with the filing process, contact us at info@mkhstaxgroup.com.