BOIs Halted Again – 5th Circuit Reverses Itself on Dec 27, 2024
To be clear, the current status on December 27, 2024, is that the BOI reporting requirement is unconstitutional, and FinCEN cannot enforce it against anyone.
The BOI requirement was part of the Corporate Transparency Act and requires LLCs and corporations to file an information report about their entity to the federal government. This information included disclosing anyone who owned 25% or more of the company or had substantial control over the company. Over 30 million small businesses have been affected by this requirement, and the majority have not yet filed. Large corporations are exempt from filing under the large company exception ($5M or more in revenue and 20 or more employees). As a result, this requirement has mostly affected and burdened small businesses.
FAQs
What happens next?
The 5th Circuit still has the case and is scheduling briefings and oral arguments for a final decision. From there, the case can be appealed to the U.S. Supreme Court. The case is Texas Top Cop Shop, Inc. v. Garland.
What if I already filed a BOI?
There is nothing to do now, but you will not need to amend or update any filings if the company changes. BOI filings are private and are not publicly available.
Where did President-Elect Trump stand on this issue, and will that influence any appeal?
President Trump vetoed the original legislation that included the Corporate Transparency Act back in 2020. This legislation had numerous bills within it, including defense spending bills, and was a total legislative package called the National Defense Authorization Act of 2021. President Trump’s statement at the time did not mention the Corporate Transparency Act but instead mentioned defense spending. His veto was overridden by Congress, and the Act became law. It is possible that a Trump Justice Department and Department of Treasury will not pursue the appeal and may withdraw any efforts the Biden administration may make to overturn the nationwide injunction.
Should I still file my BOI by December 31, 2024, out of an abundance of caution?
You should consult your own legal counsel, but as the law stands now, it is unconstitutional, and the requirement cannot be enforced against you. That being said, many business owners are frustrated by the back and forth in the Courts and are deciding to just file rather than await the outcome and final decision of the case. FinCEN is accepting BOIs still on a voluntary basis.
How did the 5th Circuit Court of Appeals reverse itself?
The first order on December 23, 2024, was the Court’s response to an emergency motion from the Federal Government to remove the nationwide injunction. That motion was heard by the first available motions panel of three judges. That panel ruled that the BOI requirement was likely constitutional, removed the nationwide injunction, and BOI reporting resumed. However, the merits panel of the 5th Circuit eventually reviewed and overturned the three-judge panel with the latest December 27, 2024, order and said the BOI requirement raises serious constitutional issues. The 5th Circuit still has the case and is scheduling briefings and oral arguments. The case is Texas Top Cop Shop, Inc. v. Garland.
