Beneficial Ownership Information Reporting Resources

Update as of December 16, 2024

Due to a recent federal court order in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., reporting companies are temporarily not required to file beneficial ownership information with FinCEN and will not face liability for non-compliance while the order is in effect. Despite this, companies can still voluntarily submit their beneficial ownership information reports. This injunction halts the enforcement of the Corporate Transparency Act (CTA) and its reporting requirements, with the Department of Justice having filed an appeal.

The CTA is crucial in safeguarding the U.S. and global financial systems from threats such as terrorist financing, drug trafficking, and money laundering, while ensuring fairness for law-abiding small businesses. Although several courts have upheld the CTA, the litigation process continues. FinCEN will adhere to the current court order, maintaining the suspension of mandatory reporting until further notice. Stay tuned as we continue to monitor this legislation and reach out to our team with any questions you have.

UPDATE AS OF AUGUST 22, 2024

In our March update below we detailed how a US District Court Judge in Alabama declared the new Corporate Transparency Act (CTA) unconstitutional as it exceeds the Constitution’s limits on congressional power. Unfortunately, this ruling only applied to the plaintiffs of that case, meaning the CTA will remain in full effect except as to members of the National Small Business Association (NSBA). Our team at Abdo is continuing to monitor this requirement as it develops but our recommendation is that organizations plan for compliance as the initial December 31, 2024 deadline approaches. To ensure we’re prepared to assist you, we’re asking for your participation in a poll regarding how your organization is handling BOI reporting. You can fill out the poll by clicking here.

IMPORTANT UPDATE AS OF MARCH 12, 2024

On March 1, 2024, a US District Court Judge in Alabama declared the Corporate Transparency Act (CTA) unconstitutional as it exceeds the Constitution’s limits on congressional power. The CTA, which took effect Jan. 1, 2024, requires many organizations to submit beneficial ownership information (BOI) reports beginning in 2024.

This ruling was a result of a suit brought by the National Small Business Association (NSBA) and means that any organizations that are members of the NSBA will not be required to comply with BOI reporting requirements. Organizations outside of the NSBA are still currently required to comply with BOI, however, additional litigation seeking relief for all businesses has been filed.

We will continue to monitor these developments and are available to answer questions as we await federal guidance. To read more about the judge’s ruling, see this update from the National Law Review: https://www.natlawreview.com/article/district-court-declares-corporate-transparency-act-unconstitutional

Beginning January 1, 2024, many organizations will be required to comply with the new Federal reporting requirement for Beneficial Ownership Information (BOI). This requirement is a component of the Corporate Transparency Act (CTA) and applies to all Reporting Companies.

Reporting Companies are all entities registered to do business in the United States that were created under a state law (LLCs, corporations, partnerships, and most other legal entities).

23 exceptions to the disclosure requirements do exist, with the most common exceptions being:

• “Large Operating Companies” that meet all of the following requirements (a) have more than 20 full-time US employees, (b) reported more than $5 million of revenue from US sources in the prior year, and (c) have a physical presence at a physical location in the U.S.
• Nonprofit entities, political organizations, and some tax-exempt trusts
• Public companies, insurance companies, banks, and registered investment companies

Organizations that do not meet an exception will be required to disclose information about their “beneficial owners” (legal name, date of birth, address, and photocopy of government-issued ID). Beneficial owners include those that exercise substantial control over the entity (senior officers or important decision-makers) or owns or controls 25% or more of the organization.

Organizations created prior to January 1, 2024 will have until January 1, 2025 to submit their initial report to FinCEN. Those that do not comply will face substantial civil or criminal penalties. Below you’ll find a resource for determining whether you are exempted, a basic overview with frequently asked questions, and additional links and information about filing to help you submit your information.

Additional Links:

FinCEN BOI Homepage
FinCEN Help & Resources
FinCEN FAQ
FinCEN BOI Small Entity Compliance Guide
Subscribe to FinCEN BOI Updates

Have questions about beneficial ownership or filing for your company? Reach out to our team of advisors and we’ll help you through it. Fill out the form below and we’ll be in touch soon to discuss.