Business advocacy group seeks destruction of millions of BOI records
Apr 15, 2025
On Dec. 3, 2024, a federal district court issued a nationwide injunction in Texas Top Cop Shop, Inc. v. Garland, No. 4:24-CV-478 (E.D. Texas 12/3/24), halting enforcement of BOI reporting requirements. A series of legal actions regarding the constitutionality of the CTA and its BOI reporting rule is ongoing, with the DOJ insisting the law is constitutional.
While the Supreme Court granted a stay of the injunction in the Texas Top Cop Shop case, a nationwide injunction was imposed in another case, Samantha Smith and Robert Means vs. U.S. Department of Treasury, No. 6:24-CV-336 (E.D. Texas 1/7/2025).
On Feb. 5, 2025, the DOJ, on behalf of FinCEN, filed a notice to appeal the decision in the Samantha Smith case and requested a stay on the current nationwide injunction. FinCEN promised to provide a 30-day filing extension for the BOI report in the event the injunction is lifted. The AICPA has urged FinCEN to consider a longer extension period to appropriately account for the lack of awareness and confusion around the filing status. On Feb. 17, 2025, a federal court lifted the last remaining nationwide injunction stopping BOI filing requirements granted in the Samantha Smith case. On Feb. 19, 2025, FinCEN extended the filing deadlines for initial, updated and corrected BOI reports to March 21, 2025. Companies with previously assigned deadlines later than March 21, 2025, were instructed to adhere to their originally set deadline.
Then, on Feb. 27, 2025, FinCEN announced that it will not impose fines or penalties, nor will it take any enforcement actions against companies for failing to file or update BOI reports by the current deadlines. FinCEN stated that an IFR, which will extend the BOI reporting deadlines, was to be issued by March 21, 2025, and emphasized its commitment to reducing regulatory burdens on businesses while balancing national security risks. Following this announcement, on March 2, 2025, Treasury announced that U.S. citizens and businesses will not be subject to fines or penalties for failing to file BOI reports after new reporting deadlines are set.
On March 21, 2025, FinCEN issued an IFR that removes the requirement for U.S. companies and U.S. persons to report BOI under the CTA. The rule now defines "reporting company" as an entity formed under foreign law and registered to do business in the U.S. by filing with a secretary of state or similar office. Additionally, entities previously known as "domestic reporting companies" are exempt from BOI reporting requirements. The IFR exempts foreign reporting companies from having to report the BOI of any U.S. persons who are beneficial owners of the foreign reporting company and exempts U.S. persons from having to provide such information to any foreign reporting company for which they are a beneficial owner.
Note that on Feb. 10, 2025, the House of Representatives passed H.R. 736, Protect Small Businesses from Excessive Paperwork Act of 2025. The bill was introduced by Rep. Zach Nunn from Iowa, and it would delay FinCEN BOI reporting for one year, until Jan. 1, 2026. The bill unanimously passed the House of Representatives by a vote of 408-0. This supports the AICPA's long-standing position for a significant delay to help small businesses. The bill now goes to the Senate for consideration. A companion bill was introduced on Feb. 11, 2025, in the Senate by Tim Scott, R-S.C., the chairman of the Senate Banking Committee. Both bills affect only reporting companies existing before Jan. 1, 2024. Companies formed after that date are not affected.
Stay tuned to the Journal of Accountancy for key updates for BOI reporting. In addition, make sure to follow LinkedIn posts from Melanie Lauridsen, VP, Tax Policy & Advocacy, AICPA & CIMA and AICPA for breaking news.
