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BOI/FinCEN Update: Court ruling and AICPA letter

Dec 10, 2024 —

This content was updated 12/10/24 at 8.22 AM.

On December 3, a federal judge in the U.S. District Court of the Eastern District of Texas issued a nationwide preliminary injunction against enforcement of the Corporate Transparency Act's Beneficial Ownership Information (BOI) reporting requirements.

In Texas Top Cop Shop, Inc., et al. v. Garland, et al. the judge determined that, because one of the plaintiffs, the National Federation of Independent Business, represents members nationwide, a nationwide injunction was necessary to provide relieve to small businesses through the conclusion of legal proceedings. Prior to the court's ruling, small businesses that met certain criteria would have had to file BOI reports by January 1, 2025.

The nationwide injunction issued by the court effectively halts the enforcement of the CTA and its implementing regulations around the country. This decision purports to remove the obligation for business owners to comply with the CTA's reporting requirements--such as providing detailed BOI to FinCEN by January 1, 2025--while this injunction is in place. The practical effect of this injunction is that the federal government must refrain from imposing penalties and requiring compliance with the CTA until further legal determinations are made regarding the constitutionality and implementation of this injunction.

On Thursday, December 5, 2024, the Department of Justice filed a formal notice of appeal to the Fifth Circuit court, seeking a say and challenging the injunction that prevents FinCEN from enforcing the BOI reporting nationwide. The court's order is a preliminary injunction only; while it temporarily pauses enforcement of the CTA on a nationwide basis, enforcement could resume if the injunction is later reversed or there is a stay.

While the court proceedings are ongoing, FinCEN recommends continuing to gather the necessary information for filing so clients are prepared if the injunction is lifted or there is a reversal. Reporting companies may also continue to voluntarily submit beneficial ownership information report through FinCEN's BOI E-Filing system. Companies with system-to-system Application Programming Interface (API) access to transmit BOI reports to FinCEN were informed that all API access to submit reports is being suspended. FinCEN will be back in touch with API providers with further guidance when it is available.

To read the court's injunction, click here. AICPA is continually updating their BOI Resource Center with information. FinCEN's website will also have updated information.

AICPA sent a letter, co-signed by 52 state/territory CPA associations, to FinCEN and the Treasury on 12/4/2024 asking that they, within their power, delay the BOI reporting deadline by one year (to January 1, 2026). The final letter can be read by members at the following link. It was adjusted to reference the court's decision.