December 27, 2024
By Barrie Charapp Beaty
Charapp & Weiss, LLP
bbeaty@cwattorneys.com
In a complete reversal from its December 23rd decision, the Fifth Circuit Court of Appeals reinstated the national injunction of the filing requirements for the Corporate Transparency Act (CTA) on December 26, 2024. As such, beneficial ownership (BOI) filings ARE NOT due by the extended January 13, 2025 deadline.
We will inform you should the Fifth Circuit reverse course again. As of December 27, there is a national injunction against the filing requirements of the CTA and beneficial ownership reports are not due by January 13, 2025.
Update: December 26
The Corporate Transparency Act (CTA) filing requirements were reinstated by the Fifth Circuit Court of Appeals on December 23, 2024. As such, beneficial ownership (BOI) filings are due January 13, 2025 instead of the December 31, 2024 prior deadline, as FinCen extended the deadline for filing. You can file your BOI reports Here. This is a reversal from the lower court’s decision on December 3, 2024.
What is the Corporate Transparency Act (CTA)?
The purpose of this act, enacted by Congress on January 1, 2021, is to both prevent and combat money laundering, corruption, tax fraud, and terrorist financing. Corporations, limited liability companies, and other entities formed or registered to do business in the U.S. must adhere to the BOI reporting requirement the CTA established. Pursuant to the Act, reports were to be filed with Financial Crimes Enforcement Network (FinCEN). FinCEN lists the criteria that determines which companies will be required to report beneficial ownership information to them. There are 23 entities that are exempt from the beneficial ownership reporting requirement. Dealers and related dealer organizations have an entity exemption if 3 criteria are met. These criteria are listed below. There is also an exemption under the CTA for a wholly owned subsidiary of an exempt business.
Dealer and Related Dealer Organization Exemption
Exemption for entities that:
1. Employ more than 20 full-time employees
2. Operate at a physical office in the U.S. AND
3. File federal tax returns demonstrating more than $5 million in gross receipts
or sales
Since the appeals court overturned the preliminary national injunction, companies qualifying under the CTA are required to file a BOI report with FinCEN by January 13, 2025, and will be subject to penalties for failing to do so. This is especially important for those entities that do not have employees that meet the exemption or gross receipts, such as dealer real estate holding companies or dealer management companies.