01/09/2025
Federal Courts Puts Beneficial Ownership Report Filing Deadline on Hold
A late-breaking legal development has put on hold the deadline for small businesses to file a report with the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) on their beneficial ownership information (BOI). BOI reports are a requirement under the Corporate Transparency Act (CTA), a 2021 federal law that is intended to enhance transparency in entity structures and ownership to combat money laundering, tax fraud and other illicit activities. Previously, reports were required to be filed with FinCEN by January 13, 2025. However, the Fifth Circuit Court of Appeals put this filing deadline on hold with its December 27 decision.
The next step is for the court to hear arguments on March 25, 2025, when it will decide on whether to keep the injunction in place (i.e., the delay in implementing the BOI rule) while the broader case is heard by the full court. Accordingly, the delay in companies having to file BOI reports with FinCEN is expected to stay in place through the end of March 2025. The only thing that could speed up this timeline is if the federal government appeals the Fifth Circuit's injunction to the Supreme Court of the United States (SCOTUS) and the SCOTUS intervenes in favor of reinstating implementation of the rulemaking.
While the recent delay in implementation of the BOI filing deadline is positive news for small businesses, the lack of consistency from the courts underscores the need for a longer delay in implementing the rule. Moving forward, SEMA and other associations that represent small businesses are seeking to have the Trump Administration delay implementation of the BOI rule through December 31, 2025.
Beneficial Ownership Rule Filing Requirements
The CTA defines a "beneficial owner" as an individual who, directly or indirectly, exercises substantial control over the reporting company or owns or controls at least 25% of the ownership interests of the reporting company. An individual exercises "substantial control" over an entity if the individual:
Serves as a senior officer.
Has authority over the appointment or removal of a senior officer or a majority of the board of directors.
Directs, determines or has substantial influence over important business decisions.
Beneficial ownership information reporting is not an annual requirement. Businesses only must file a report with FinCEN once, unless the filer needs to update or correct information about their company's beneficial ownership. Generally, reporting companies must provide four pieces of information about each beneficial owner:
Name.
Date of birth.
Address.
The identifying number and issuer from either a non-expired U.S. driver's license, a non-expired U.S. passport or a non-expired identification document issued by a State (including a U.S. territory or possession), local government or Native American tribe. If none of those documents exist, a non-expired foreign passport can be used. An image of the document must also be submitted.
Companies must also submit certain information about themselves, such as their name(s) and address. In addition, reporting companies created on or after January 1, 2024, must submit information about the individuals who formed the company ("company applicants").
Filers can also view informational videos and webinars, find answers to frequently asked questions, connect to the contact center and learn more about how to report at www.fincen.gov/boi. Also, SEMA member companies can listen to a webinar on the BOI reporting requirements. There is no charge for SEMA members, as the association is a member of the Small Business Legislative Council (SBLC), which hosted the webinar.
Beneficial Ownership Information (BOI) Exemptions
Small businesses can be exempted from filing a report with FinCEN if they meet the following three criteria:
Employ more than 20 employees
Operate a physical office in the United States
Filed federal tax returns demonstrating more than $5 million in gross receipts or sales.
Additional information on which companies must file BOI reports with FinCEN is outlined below. If your business is required to submit a report, click here to file a BOI report with FinCEN.
For more information, contact Eric Snyder, SEMA's senior director of federal government affairs, at [email protected].
