Recent Updates To Beneficial Ownership Reporting Requirements In 2024
Latest Changes To Beneficial Ownership Reporting Rules
Concerns about illicit activities linked to corporations have been on the rise over the past few years. In 2020, these concerns gained more traction as the government began exploring ways to enhance corporate transparency. In 2021, the Corporate Transparency Act (CTA) was signed into law, requiring certain businesses, including corporations and LLCs, to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).
This law, impacting a large portion of businesses across the United States, was implemented on January 1, 2024, with businesses now facing a deadline of January 1, 2025, to submit their initial reports. However, due to the newness of the law, there have been ongoing adjustments to the requirements, with FinCEN issuing updates as changes occur. Arizona tax attorneys have been diligently monitoring these shifts to guide businesses during this transition.
The latest updates revolve around legal challenges to the law, which led to an injunction. Afterward, a temporary stay on the injunction was issued, which was later lifted, reactivating the initial injunction and pausing the enforcement of the CTA. This blog provides a detailed breakdown of these updates and their impact on businesses.
The Initial Injunction Against The Corporate Transparency Act
On December 3rd, 2024, a Texas District Court issued a nationwide injunction against the enforcement of the CTA. This meant that businesses that had not yet filed their BOI report were not compelled to do so—although they still had the option to submit it voluntarily. The lawsuit that prompted the injunction was filed by a group of small businesses, including Texas Top Cop Shop, Inc., which argued that the CTA infringed upon privacy rights and imposed an undue burden on smaller businesses.
Although other district courts had ruled in favor of the CTA’s constitutionality, this case resulted in a temporary pause. In response, the Department of Justice filed an appeal, requesting that the injunction be lifted while the appeal is pending. This occurred on December 5th.
Stay Of The Injunction: A Temporary Reversal
On December 23rd, 2024, the Fifth Circuit Court of Appeals granted a stay on the injunction, reinstating the CTA’s enforcement while the appeal process continued. The stay meant that the requirements of the CTA were back in effect, and businesses were expected to meet the filing deadline.
Recognizing the confusion caused by the injunction, FinCEN extended the deadline for filing initial reports from January 1, 2025, to January 13, 2025. Arizona tax attorneys quickly resumed their efforts to help businesses stay compliant with the updated requirements.
Reversal Of The Stay: Preserving The Constitutional Status Quo
However, just a few days later, on December 26th, the Fifth Circuit Court of Appeals reversed the stay, aiming to maintain the “constitutional status quo” during the ongoing appeal. The court’s decision indicated that it wanted to avoid any potential complications in case the CTA is ultimately deemed unconstitutional. The following factors likely influenced this decision:
- Constitutional Concerns: The court expressed serious consideration of the constitutional arguments against the CTA.
- Potential Harm To Plaintiffs: The plaintiffs made a compelling case that continuing with the CTA’s enforcement could cause irreparable harm.
- Procedural Issues: The court also questioned the appropriateness of a nationwide injunction, given that district courts had typically issued rulings specific to the cases before them.
What Does This Mean For Businesses?
So, what does this all mean for Arizona tax attorneys and their clients? If you haven’t yet submitted your BOI information, the filing deadline is currently on hold. You’re not required to submit a report at this time, but you may choose to do so voluntarily. A final decision is expected in early 2025.
Should the court decide that the injunction should be lifted, businesses will likely face a new deadline for submitting BOI information, possibly by January 13, 2025, or another date to be determined. In the meantime, it’s crucial for businesses to keep up with FinCEN updates and consult with experienced tax attorneys in Arizona to ensure compliance.
Stay Informed & Compliant With The Latest BOI Requirements
Navigating these evolving regulations can be challenging, but our team of tax attorneys in Scottsdale is here to help. We can assist you in understanding the latest legal changes and ensure your business remains compliant with all requirements. If you’re facing legal challenges or need advice regarding your BOI filing, don’t hesitate to contact us for a consultation.
At Corporate Transparency Act Filing Services, we’re committed to protecting your business’s interests. Let us guide you through these regulatory changes with confidence and peace of mind. Reach out today!
Corporate Transparency Act Filing Services
Email: lchapman@silverlawplc.com
Website: www.corporatetransparencylawyers.com
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