January 2025 update on beneficial ownership information reporting
On January 23, 2025, the US Supreme Court granted the government’s motion to stay a nationwide injunction that had been previously reinstated in late December by the Fifth Circuit Court of Appeals in response to ongoing litigation (Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland). As such, this particular injunction has been lifted.
However, a separate nationwide injunction issued by a different federal judge in Texas (Smith v. U.S. Department of the Treasury) remains in force as this second Beneficial Ownership Information/Corporate Transparency Act (BOI/CTA) case is not impacted by the Supreme Court’s decision. The Smith case is based on different facts and circumstances from the Texas Top Cop Shop case, and as such BOI/CTA remains on hold under this second injunction until litigated further.
As of this publication, the government has not appealed the ruling in the Smith case, meaning the nationwide injunction will remain in force for the foreseeable future.
FinCEN Response
FinCEN released an alert on January 24, 2025, in response to the Supreme Court ruling, which affirmed reportable entities are not required to file beneficial ownership information with FinCEN despite the decision the Texas Top Cop Shop case. Additionally, the alert specified that reportable entities will not be subject to liability if beneficial ownership information is not submitted while the Smith injunction remains in force. Reportable entities may continue to submit BOI reports voluntarily.
BOI/CTA remains a very fluid situation subject to future adjudication, and as such responsible parties should continue monitoring developments and consulting legal counsel accordingly.
We will continue to update clients on the status on the Corporate Transparency Act and the BOI reporting requirement as more information is available.
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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.
