Decision Under Appeal by the U.S. Dept. of Justice, Filing Deadline for Covered Businesses Scheduled for January 1, 2025
Last week, the Eastern District of Texas Court Tuesday granted a nationwide injunction (pause) for Beneficial Ownership Information Reports (BOIR) to the Financial Crimes Enforcement Network (FinCEN), an agency under the U.S. Treasury Department.
The BOIR requirements were set out in earlier approved legislation, intended to target money laundering and other illegal business activity. In its ruling, the Court agreed with plaintiffs’ that the BOIR requirements for smaller businesses had exceeded Congress’ authority under the Constitution.
The ruling stated, in part;
Plaintiffs contend that the CTA violates the promises our Constitution makes to the People and the States. Despite attempting to reconcile the CTA with the Constitution at every turn, the Government is unable to provide the Court with any tenable theory that the CTA falls within Congress’s power. And even in the face of the deference the Court must give Congress, the CTA appears likely unconstitutional.
As IAM has previously highlighted, and as part of the requirements, small businesses would need to file BOIRs with FinCEN by January 1st, 2025. Required filings are for those companies, partnerships, S. Corps and LLCs with fewer than 20 employees, $5 million or less in annual U.S. revenue and those without at least physical, operating office in the US. Companies meeting all of these requirements are exempt from filing with FinCEN.
The Financial Crimes Enforcement Network (FinCEN) has created a detailed FAQ section if you remain uncertain about the need for your company to file.
What’s Next
While the pause remains in effect, FinCEN has stated they will continue to accept voluntary filings by covered businesses. As the immediate appeal to last week’s ruling, filed by the U.S. Dept. of Justice awaits a response from the Fifth Circuit Court, Congressional Committees are continuing to determine if enough time remains in session to pass legislation that would provide another 12 month delay in the registration requirement. FinCEN reported that fewer than 10 million of the estimated 36 million covered entities had filed their reports as of December 1st.
IAM will continue to follow the court processes and Congressional action, and update members with any additional progress.
If you have questions on these or other issues, please reach out to Bryan Vickers, with IAM’s Legislative and Regulatory team, bvickers@pacellp.com, 703-403-2882.