Corporate Transparency Act: Beneficial Ownership Interest (BOI) Reporting Update

March 1, 2024: A significant ruling emerged from the U.S. District Court for the District of Alabama. The court declared the Corporate Transparency Act (CTA) unconstitutional in the case of “National Small Business Association v. Yellen” (Case No. 5:22-cv-01448). This legal challenge was brought by the National Small Business United against the CTA’s requirement for small businesses to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).

March 4, 2024: In response to the court’s decision, FinCEN announced it would not enforce the beneficial ownership information (BOI) reporting requirements against the plaintiffs, which include the 65,000-member association and the original business that initiated the lawsuit.

March 11, 2024: FinCEN filed an appeal against the ruling. This appeal will likely progress to the Supreme Court, indicating that the suspension of the BOI reporting requirement is temporary until all appeals are resolved. Despite some speculation that the case may be overturned and the filing requirements reinstated, the presiding judge issued a clear directive: “The Defendants, along with any other agency or employee acting on behalf of the United States, are PERMANENTLY ENJOINED from enforcing the Corporate Transparency Act against the Plaintiffs,” Judge Burke stated in a separate final judgment.

What Should Businesses Do Now?

Given the current legal landscape, businesses must navigate these uncertainties carefully:

• New Businesses Formed After 12/31/2023: It is advisable to file the BOI form within 90 days of formation to stay compliant with potential future rulings.
• Existing Businesses Prior to 1/1/2024: Following last year’s guidance, it is recommended to delay filing the form until late November 2024. By this time, the final outcome of the appeal might be clearer. For these businesses, the form is not due until 12/31/2024.

Staying informed and prepared is crucial during this period of legal flux. As the situation evolves, businesses should closely monitor any updates regarding the appeal and adjust their compliance strategies accordingly.

Should you have any questions, you can contact Pivotal Forensic Accounting & Audits for further assistance and guidance.