The end of last week saw a flurry of activity related to the status of the Corporate Transparency Act that concluded with the reality that most companies required to report their ownership information to the Federal government under the Corporate Transparency Act now must comply by March 21, 2025.
The status of the Corporate Transparency Act over the past few weeks has been reminiscent of the child’s game green-light red-light.
Multiple court actions – some of which initially issued stays on enforcement of the act – provided an uncertain environment for business owners about the need to disclose this information, while FinCEN (the Financial Crimes Enforcement Network) navigated enforcement questions.
We know some of our clients have voluntarily filed, and many others have taken a wait-and-see approach.
Last week, in the most recent court action, the U.S. District Court for the Eastern District of Texas lifted the nationwide injunction on the reporting requirements of the Corporate Transparency Act through a ruling on the Smith v. U.S. Department of Treasury case.
While the actual underlying case continues to move forward, the stay the court earlier issued to stop enforcement of the reporting requirements has been lifted. Of course, multiple cases on this issue in many jurisdictions continue to work their way through the judicial system. In these various cases, consensus seems to be forming that Congress does have the constitutional authority to enact the Act relying upon the commerce clause of the constitution, which explains why some members of Congress have introduced legislation to delay the enactment of the Corporate Transparency Act.
As a result of the district court action last week, FinCEN issued guidance requiring compliance with the act and extended the reporting deadline for most companies until March 21, 2025.
In its announcement, FinCEN stated that it was continuing to review its options “to further modify deadlines, while prioritizing reporting for those entities that post the most significant national security risks.”
Whatever that means.
Late Friday, the Justice Department wrote to the U.S. Court of Appeals for the Eleventh Circuit (Alabama, Florida, and Georgia) asking the court to reverse the lower court (district court) ruling in National Small Business United v. U.S. Department of Treasury, because that case was the only case with a current judicial order hindering the enforcement of the reporting requirements of the Corporate Transparency Act. Oral arguments on the NBSU case were heard in September but the Eleventh Circuit has yet to issue a decision.
It appears the push is on by the Federal government to require enforcement of the reporting requirements.
While it is very possible future action in the Texas Top Shop Case (which has oral arguments scheduled on March 25, 2025) or any of the other pending cases could affect the filing requirements, the penalties for not filing, or the enforcement of the Corporate Transparency Act, we strongly encourage you to continue to monitor these developments, however, for now, immediate action is now required.
At a minimum, you should compile the information required to submit the report.
A Change in Information.
If you have already complied, remember that if any changes to information a reporting entity has provided have changed; the entity has thirty calendar days to update the information to avoid potential penalties.
What could cause a reportable change?
Change of name
Change in beneficial owners at the 25% threshold level
Any change in a beneficial owner’s name, address, or unique identifying number previously provided to FinCEN. For example, if a beneficial owner obtains a driver’s license that has a new number on it.
Filing Your Company BOI report
Whether you decide to file now or later, here is the information you will need to complete your company’s initial beneficial ownership report:
- The full legal name of your company
- Tax Identification Number Type (e.g. EIN, SSN, Foreign)
- Tax Identification Number
- Country/Jurisdiction of formation
- Current US Address
- Company Applicant FinCEN IDs
- Individual Beneficial Owner Information
If our law firm formed your company, we are the Company Applicant for your company. For companies that were formed by our firm, you will need to reach out to Leah Hall leah@mitchell-firm.com, to obtain the necessary FinCEN IDs for the attorney responsible for the filing of your formation documents.
We recognize some of our clients will file only one beneficial ownership information report (because they only need to report for one company) while others will file for multiple entities. We have investigated some options for you to consider.
First, you can file the information yourself. Here is a quick “how to” video.
Second, for those of you filing for only one or two companies, we suggest you review the offerings of Northwest Registered Agent.
Finally, if you are filing more reports for multiple companies, we suggest you consider either of the following:
(1) Corporate Services Company (CSC)
(2) Wolters Kluwer
We plan to keep you posted as events unfold.
Please contact us if you have any questions.