Navigating FinCEN Compliance: Quickly Approaching Deadlines for Businesses formed before 2024
Important Update:
3/03/2025: On February 27, 2025, FinCEN announced it will not impose penalties on companies that do not submit their beneficial ownership information reports by the March 21 deadline. The agency plans to issue an interim final rule to establish new reporting deadlines no later than March 21 and intends to revise the Beneficial Ownership Information Reporting Rule this year. On March 2, 2025, the Treasury Department clarified that no penalties will be imposed on U.S. citizens or domestic companies, even after the upcoming rule changes. Instead, it will propose new rulemaking to narrow the scope of the requirement to only foreign reporting companies. Additional information can be found on FinCEN’s website at https://www.fincen.gov/. We are closely monitoring developments and legislation and will continue to provide updates on this blog as soon as they are available.
2/20/2025: The injunctions on the Corporate Transparency Act detailed below have all been lifted. As of February 20, 2025, the deadline for most companies to file their BOI Report is March 21, 2025. All companies formed on or prior to February 20, 2025, must file their initial BOI Report, and update any previously filed reports if necessary, by March 21, 2025. All companies formed after February 20, 2025, have 30 calendar days to file their initial BOI Report. Note, if a reporting company’s principal place of business is located in an area designated by both FEMA and the IRS as qualifying an individual for public assistance and filing relief as a result of a hurricane or other natural disaster, the reporting company may have a further extension to file its BOI Report. Additional information can be found on FinCEN’s website.
1/27/2025: On January 23, 2025, the U.S. Supreme Court granted the government's motion to stay a nationwide injunction issued by the U.S. District Court for the Eastern District of Texas in Texas Top Cop Shop, Inc. v. McHenry (formerly Texas Top Cop Shop, Inc. v. Garland). However, a separate nationwide order in Smith v. U.S. Department of the Treasury from another federal judge in Texas remains in effect. As a result, reporting companies are not currently required to file beneficial ownership information with FinCEN, despite the Supreme Court's decision. They may, however, choose to voluntarily submit these reports.
12/27/24: On December 26, 2024, the United States Court of Appeals for the Fifth Circuit vacated its own stay of the nationwide injunction. Thus, Reporting Companies are not obligated to comply with the Corporate Transparency Act at this time. We will continue to provide updates on this issue.
12/26/24: On December 23, 2024, the United States Court of Appeals for the Fifth Circuit lifted the nationwide injunction prohibiting the enforcement of the CTA. Thus, Reporting Companies are once again obligated to comply with the Act. Fortunately, however, FinCEN extended the January 1, 2025 deadline for reporting companies to January 13, 2025.
12/3/24: A nationwide preliminary injunction has been issued prohibiting the enforcement of the CTA and the required reporting filed thereunder. This means companies are not currently required to comply with the January 1, 2025 reporting deadline. However, an appeal has been filed by the Department of Justice so the injunction could be lifted or amended at any time. Therefore, we recommend continuing to gather the information needed to complete the report as if the January 1, 2025 deadline were still in effect. It is optional whether you want to go ahead and voluntarily file the BIO report or wait for further court action.
A variety of businesses, such as LLCs, LLPs, partnerships, and corporations, formed before January 1, 2024, have until January 1, 2025, to file their initial report with the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
The CTA requires reporting companies to file a beneficial ownership information report (BOI Report) with FinCEN. For reporting companies formed before January 1, 2024, the BOI Report must provide information about the beneficial owners of the entity. A beneficial owner is any individual who, directly or indirectly, either (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25 percent of the ownership interests of a reporting company. The terms “substantial control” and “ownership interest” are broadly defined.
Reporting companies must report the following information: full legal name and any trade or “doing business” names; address; jurisdiction of organization of domestic reporting company or jurisdiction where foreign reporting company first registers; and IRS, TIN, EIN for a domestic reporting company, or similar tax identification number for a foreign reporting company.
Each beneficial owner must report the following information: full legal name, birthdate, home address, and a unique identifying number and issuing jurisdiction from an acceptable identification document, such as a passport, driver’s license, or other government-issued identification document (and an image of such document).
Reporting companies established prior to January 1, 2024, have until January 1, 2025, to file initial BOI Reports with FinCEN. Failure to comply with the initial and ongoing reporting requirements can lead to civil and criminal penalties, including a maximum civil penalty of $500 per day (up to $10,000) and imprisonment for up to ten years.
Note – Businesses established before 2024 that are located in areas designated for FEMA and IRS relief due to Hurricane Milton may qualify for a six-month filing extension.
Resources
Additional information is available on the FinCEN website at https://www.fincen.gov/boi. HSB lawyers can assist you in determining whether you are required to file a beneficial ownership report or qualify for an exemption from filing, and, if a filing is required, in determining the persons for whom information is required.
We provide an in-depth outline of the Corporate Transparency Act here:
The Corporate Transparency Act – New Federal Requirements Effective January 1, 2024
For questions or assistance, please contact Sterling Busbee, Tyler Gilliam, or Mallory Vincelli.
