The courts continue to battle over the constitutionality of the Beneficial Ownership Information (BOI) Reporting included in the Corporate Transparency Act that was poised to go into effect on Jan. 1, 2025. This regulation requires approximately 32.6 million businesses to file with the Financial Crimes Enforcement Network arm of the U.S. Treasury to disclose substantial owners as well as individuals with substantial control.

Latest Update to BOI: As of Jan. 2, 2025, the U.S. Court of Appeals for the Fifth Circuit has allowed the Dec. 2, 2024 injunction to go into effect, causing the Beneficial Ownership Information Reporting to once again be unenforceable.

Timeline of Beneficial Ownership Reporting

• Jan. 1, 2021 – Corporate Transparency Act enacted
• Jan. 1, 2024 – Beneficial Ownership Reporting requirement of CTA goes into effect for all newly formed entities with previously formed entities to have delayed reporting until Jan. 1, 2025
• Dec. 2, 2024 – Nationwide Injunction by Texas Federal Judge to prevent BOI to be enacted
• Dec. 18, 2024 – Extension for BOI reporting deadline removed from Congress’ Budget Reconciliation Bill
• Dec. 23, 2024 – U.S. Court of Appeals for the Fifth Circuit issues stay of injunction, once again allowing BOI to be enforced. FinCEN delays due date for most filers to Jan. 13, 2025
• Dec. 26, 2024 – Merits Panel of the Fifth Circuit vacated the previous stay, allowing the original nationwide injunction to move forward
• Dec. 31, 2024 – Government requests U.S. Supreme Court to unblock enforcement of the Beneficial Ownership Reporting
• March 25, 2025 – Scheduled arguments with the Fifth Circuit to discuss merits of government’s appeal

As multiple other Courts of Appeals have ruled that the Corporate Transparency Act is constitutional, it remains to be seen whether the reporting may still go into effect prior to the next scheduled hearing in March of 2025. It may also be possible the Supreme Court steps in to unblock the enforcement of CTA before that time.

Next Steps

Due to the uncertainty involved of if and when the Beneficial Ownership Reporting will go into effect, small businesses are faced with determining how best to proceed.

1. File BOI Reporting Voluntarily – Entities with simple reporting structures and no expectation of significant changes may be best suited to file the Beneficial Ownership Information voluntarily. This may be ideal to allow these entities to avoid on-going surveillance of the status of the BOI enactment.
2. Collect BOI Information – Entities with more significant reporting structures may want to continue to collect the necessary information and be prepared to file in the case that enforcement of the new reporting goes into effect in the near future.
3. Wait and See – Some companies may choose to monitor the status of the BOI Reporting through the courts before moving forward with collecting or filing their Beneficial Ownership Information. RKL urges these companies to have a plan that allows for a quick response to this reporting requirement, including any necessary outsourced providers.

RKL partners with a variety of law firms and service providers capable of helping clients fulfill their BOI Reporting obligation.

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Kirsten T. Deeds is a Partner and International Tax Practice Leader at RKL. Deeds has nearly two decades of experience in international tax and provides specialized services, including U.S. taxation of foreign earnings, ASC 740 tax provision work, corporate U.S. and Canadian compliance, due diligence for mergers and acquisitions, and transfer pricing.