Corporate Transparency Act Injunction Pauses BOI Filing Requirements

In December, a federal court issued a Corporate Transparency Act injunction, temporarily halting the enforcement of Beneficial Ownership Information (BOI) report filing requirements. This development has left many small business owners wondering, “Is BOI still required?” For now, the answer is no — but this pause may be short-lived. Here’s what you need to know about the injunction, the BOI filing requirements, and what could happen next.

On December 3, 2024, a federal court in Texas granted a nationwide preliminary injunction halting the enforcement of the Corporate Transparency Act’s reporting requirements, thereby making BOI report filing optional pending further legal proceedings. After some back and forth in the courts, the U.S. Supreme Court made a decision on the Texas Top Cop Shop v. Garland case, but, despite this, there is a separate nationwide order per Smith v. U.S. Department of the Treasury that still remains in place. This means that BOI report filing is still voluntary, but it’s ongoing litigation. We will keep you updated on new developments.

What the Injunction Means for BOI Filing Requirements

The Corporate Transparency Act (CTA) was designed to combat financial crimes like money laundering by requiring certain businesses to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). Beneficial owners are individuals who own at least 25% of a company or have substantial control over it. The BOI filing requirements took effect in 2024, but the CTA injunction has put them on hold. 

This injunction means that businesses currently don’t have to file BOI reports while legal challenges to the CTA are resolved. However, this relief is temporary, and compliance could become mandatory again if the injunction is lifted or modified.

Is BOI still required?

For now, BOI filing is not required, but the situation is fluid. Businesses should remain prepared for possible changes. If the CTA injunction is overturned, FinCEN could reinstate the BOI report filing requirements quickly, leaving little time to react. Staying informed about these developments is crucial for small business owners.

Why the Injunction Was Issued

The court’s decision to issue the Corporate Transparency Act injunction stems from ongoing legal debates about the scope and impact of the BOI filing requirements. Critics argue that the reporting rules place an undue burden on small businesses, many of which lack the resources to navigate complex compliance obligations. While the legal battles continue, the injunction offers temporary relief but also creates uncertainty for entrepreneurs.

What could happen next?

The future of the BOI filing requirements depends on how the courts resolve the legal challenges to the CTA. Here are a few possible scenarios:

• The injunction is lifted: If the court rules in favor of FinCEN, the BOI filing requirements will go into effect, potentially with little notice.
• The rules are revised: Lawmakers or regulators may choose to modify the BOI requirements to address concerns about their impact on small businesses.
• The injunction is upheld: If the legal challenges succeed, the BOI requirements could be delayed indefinitely or repealed entirely.

What is the BOI report?

The BOI report is a key component of the CTA. It requires certain businesses to disclose information about the business and the owners. Each owner will need to provide:

• Their legal name
• Date of birth
• Current address (residential address or business address)
• An identification number from a non-expired document like a U.S. passport, state ID, or foreign passport
• An image of that ID

The BOI report also asks for the following information about the company: 

• The full legal business name
• Any trade name or DBA the business holds
• Current business address (must be in the U.S.)
• Jurisdiction where the business was formed
• Taxpayer identification number (foreign reporting company) or employer identification number (domestic reporting company)

Not all businesses are subject to BOI filing requirements. For example, publicly traded companies and financial institutions are exempt from BOI reporting. Small business owners should verify whether their entity type would be required to file if the injunction is lifted. 

What should you do now?

Here’s how to stay ready for possible changes to the BOI filing requirements:

• Stay informed: Follow trusted sources like FinCEN for updates about the CTA injunction and BOI requirements.
• Gather your information: Use this time to collect details about your business’s beneficial owners in case reporting becomes mandatory.
• Work with trusted partners: ZenBusiness can help you navigate compliance and stay prepared for whatever comes next.

How ZenBusiness Helps You Prepare for Compliance

At ZenBusiness, we understand that legal compliance can be confusing and stressful. That’s why we offer our Beneficial Ownership Information Filing Service. With this service, we guide you through the process of BOI reporting so that you’ll have the peace of mind of knowing you’re in compliance. With ZenBusiness, you can focus on growing your business while we handle the complexities of compliance.

The Corporate Transparency Act injunction offers temporary relief, but the future of BOI filing requirements remains uncertain. With ZenBusiness by your side, you’ll have the support and tools to adapt to changes and keep your business moving forward.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.