CTA BOI Survey for All

[Jim-from-Ohio]

Well how about this. a nationwide injunction has been levied against the BOI.

https://natlawreview.com/article/texas-federal-court-issues-nationwide-injunction-against-enforcemen...

second source: https://news.bloombergtax.com/daily-tax-report/corporate-transparency-act-blocked-nationwide-by-texa...

and: https://www.capitalpress.com/nation_world/nation/judge-puts-nationwide-hold-on-corporate-reporting-l...

[BobKamman]

Surprisingly, the Texas judge is an Obama appointee with an illustrious academic career (undergraduate degree from Pittsburgh, law degree from Baylor). He’s the same judge who was reversed in the 2017 case that Ezekiel Elliott brought against the NFL.

Since no one is enforcing the law right now anyway, this is just something to keep in mind if your clients decide not to comply and the government eventually wins.  Violations in 2025 may not be enforced until 2026, when the penalties may have increased.  I couldn't find whether the Secretary of the Treasury is also included as a defendant, but my guess is that she is, since the Attorney General would only be enforcing the criminal penalties.  Will BOI be repealed in the first 100 days, now that the Isolationists are in charge?  Stay tuned.  

[PATAX]

@Jim-from-Ohio Thank you Jim for that pertinent information. 

[sjrcpa]

The government filed an appeal late yesterday.

[BobKamman]

@sjrcpa How do you know it was "late" ?  These things aren't time-stamped for the online docket.  Incidentally, the judge filed an amended order today (December 6).  It doesn't say what changed, but it runs 80 pages instead of the 79, first time around.  So the government filed an amended appeal to it.  Don't know whether that was done morning, noon or night.  Here is the meat of the amended order:

"Therefore, the CTA, 31 U.S.C. § 5336 is hereby enjoined. Enforcement of the Reporting Rule,
31 C.F.R. 1010.380 is also hereby enjoined, and the compliance deadline is stayed under § 705 of
the APA. Neither may be enforced, and reporting companies need not comply with the CTA’s
January 1, 2025, BOI reporting deadline pending further order of the Court."

Emphasis added.  Just as a reminder that a preliminary injunction is .... preliminary.  But it can still be appealed.  

[PATAX]

Update - go to fincen website to read for yourself: "in light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with fincen and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports."  Go to fincen website to read for yourself just in case of typo, etc. Per previous Bloomberg Law article dated 12/6/2024: "U.S. Appeals Order Halting Corporate Transparency Act Disclosures". Go to Bloomberg Law and read for yourself.

[IRonMaN]

And then if the government prevails, how much time will folks have to get things filed?  This whole thing has been messed up since day one.  Has anybody checked lately to see if FinCen is one of those government functions that Elon is going to declare a waste of taxpayer dollars?  😮 

[BobKamman]

Thanks to an email newsletter from James Counts, California CPA, for this bulletin:

A provision for a one-year delay in BOI reporting has been included in the Continuing Resolution (CR).

The relevant language is on page 233 of the bill text using the pdf page number. Here is the link to the entire document:

https://docs.house.gov/billsthisweek/20241216/CR.pdf.

To find any information in the bill (such as this section on page 233 you can hit control F and then in the search box that comes up enter your term you would look for in the bill.

SEC. 122. EXTENSION OF FILING DEADLINE FOR CERTAIN PRE-EXISTING REPORTING COMPANIES.

Section 5336(b)(1)(B) of title 31, United States Code, is amended by striking ''before the effective date of the regulations prescribed under this subsection shall, in a timely manner, and not later than 2 years after the effective date of the regulations prescribed under this sub section,'' and inserting ''before January 1, 2024, shall, not later than January 1, 2026,''.

Before this change it reads:

    (B) Reporting of existing entities.-In accordance with regulations prescribed by the Secretary of the Treasury, any reporting company that has been formed or registered before the effective date of the regulations prescribed under this subsection shall, in a timely manner, and not later than 2 years after the effective date of the regulations prescribed under this subsection, submit to FinCEN a report that contains the information described in paragraph (2).

After the change it reads:

    (B) Reporting of existing entities.-In accordance with regulations prescribed by the Secretary of the Treasury, any reporting company that has been formed or registered    before January 1, 2024, shall, not later than January 1, 2026,    submit to FinCEN a report that contains the information described in paragraph (2).

[Taxes-by-Rocky]

Just thought I would throw this one out there:

If a Federal court imposes a nationwide injunction against filing BOI forms.....wouldn't assisting a client to file a BOI form be considered the practice of law (i.e., you're advising the client to do something that the court has advised you (the client) not to do)?  Or is going against an injunction not considered practicing law?

I'm not an attorney.

[BobKamman]

The injunction is against FinCen for enforcing the law after January 1.  There is no injunction preventing people from filing it anyway.  

It will be ironic if the law was passed over Trump's veto when he was President, but it won't be extended because of Trump's veto when he's not President.  Well, to quote Will Rogers, I'm not a member of any organized political party -- I'm a Republican.  

[Terry53029]

This is from Spidell of CA.

SPIDELL

Tax • Analysis • Education

Congress proposes one-year delay in BOI reporting requirements for most businesses (12-18-24)

Tucked away in the proposed 1,500-page continuing resolution (CR) that Congress is hoping to pass this week is a one-year delay in the January 1, 2025, beneficial ownership information (BOI) reporting deadline for those entities subject to the BOI reporting mandate that were in existence prior to January 1, 2024. (CR Title V, Subtitle C, §122) It is unclear at this stage whether the CR will pass in its current form.

If this provision is enacted as currently proposed, it would not impact the requirement that entities subject to the mandate that are formed in 2024 file their initial report within 90 days of formation and those entities formed after 2024 file their reports within 30 days of formation. However, the preliminary injunction put in place by the U.S. District Court in East Texas has put these requirements on hold, at least for now. 

[IRonMaN]

The stupid elected turds seem to struggle on how just to keep the government doors open these days.  Maybe if they passed laws that dealt with one item at a time instead of packing every piece of legislation with some other side deal to make a couple of other elected dufuses happy the country might be better off.  But then again, they would never pass a single law because common sense doesn't exist in Washington.

[BobKamman]

@IRonMaN Some states have a "single subject" rule for any bills that require a vote.  Sometimes it's difficult to define how broad the subject can be.  There is something to be said for that, but there is something to be said for the horse trading that leads to numerous ornaments on the Christmas tree.  When the President is not elected with 50% of the vote, does the majority who voted against him deserve a few concessions?

[sjrcpa]

Maybe, but deserving and receiving are different.

[Jim-from-Ohio]

BOI back in play.. 

In light of a December 23, 2024, federal Court of Appeals decision, reporting companies are once again required to file beneficial ownership information with FinCEN. However, because the Department of the Treasury recognizes that reporting companies may need additional time to comply given the period when the preliminary injunction had been in effect, we have extended the reporting deadline as follows:

• Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)

[BobKamman]

And it continues

• Reporting companies created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.

•  Reporting companies created or registered in the United States on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.

• Reporting companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025. These companies should abide by whichever deadline falls later

• Reporting companies that are created or registered in the United States on or after January 1, 2025 have 30 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.

Congress wanted to extend the deadline for another year, but the car dealer from South Africa wouldn't let them.  He doesn't have to file, he's worth too much money.  

[BobKamman]

From the 5th Circuit’s 8-page opinion:

Independently, the government has made a strong showing against the Businesses’ facial challenge to the CTA. The Supreme Court has been clear that a successful facial “challenger must establish that no set of circumstances exists under which the Act would be valid.” United States v. Salerno, 481 U.S. 739, 745 (1987). In other words, “[t]he fact that [a statute] might operate unconstitutionally under some conceivable set of circumstances is insufficient to render it wholly invalid.” Id.; see also United States v. Rahimi, 602 U.S. 680, 701 (2024) (confirming that, when assessing facial challenges, courts must “consider the circumstances in which [the statute is] most likely to be constitutional” instead of “focus[ing] on hypothetical scenarios where [the statute] might raise constitutional concerns.”). Here, the CTA at least operates constitutionally when it requires that corporations engaged in business operations affecting interstate commerce disclose their beneficial owner and applicant information to the Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). See Raich, 545 U.S. at 17. Thus, the statute is likely constitutional on its face. See Salerno, 481 U.S. at 745.

***
Similarly, the government has satisfied the third and fourth Nken factors by showing “that the balance of the equities weighs heavily in favor of granting the stay.” See Ruiz v. Estelle, 650 F.2d 555, 565 (5th Cir. Unit A June 1981). To start, the harm that a stay would cause the Businesses is minimal. FinCEN estimated that a typical, simple company would spend about ninety minutes (or about $85 worth of time) to complete and file CTA’s required report, which may be filed for free. 87 Fed. Reg. 59498, 59589–90 (Sept. 30, 2022). The Businesses neither contend that they have more complex structures that would require more time or money, nor state their potential costs with any particularity.

[BobKamman]

And in a footnote:

The Businesses warn that lifting the district court’s injunction days before the compliance deadline would place an undue burden on them. They fail to note, however, that they only filed suit in May 2024 and the district court’s preliminary injunction has only been in place for less than three weeks as compared to the nearly four years that the Businesses have had to prepare since Congress enacted the CTA, as well as the year since FinCEN announced the reporting deadline.