Here we go again.

Just weeks after a judge ordered a nationwide preliminary injunction against enforcement of the Corporate Transparency Act, businesses are once again required to report beneficial ownership information. Most deadlines have been extended to January 13.

  • The bipartisan Corporate Transparency Act, designed to thwart money laundering and other financial crimes, became law in 2021 and took effect at the beginning of this year.

On December 23, the U.S. Court of Appeals for the Fifth Circuit nullified that injunction, allowing the Treasury Department’s Financial Crimes Enforcement Network (aka FinCEN) to once again enforce the CTA and its beneficial ownership information reporting requirements.

This latest decision in Texas Top Cop Shop v. Garland et al., just one of several pending lawsuits against the CTA, argues that the law infringes on First Amendment protections and violates privacy rights under the Fourth Amendment due to the required disclosure of personal information.

ICYMI: BOI Reporting Requirements: What Small Businesses Need To Know

The vast majority of PPAI’s roughly 15,000 member companies are subject to this reporting requirement, now due by mid-January. Filing can be completed for free online by going to FinCEN’s BOI e-filing website and selecting “Get Started” at upper right or “File BOIR” at bottom left. Firms can also choose to engage an attorney or accountant for help with filing.

  • Failure to comply can trigger civil penalties (up to roughly $600 per day) and criminal penalties (up to two years’ imprisonment and a fine of up to $10,000).
  • Both individuals and corporate entities can be held liable for “willful violations.”

Who Must File?

Every business entity created by filing a document with a secretary of state or equivalent office must file a BOI report, unless it qualifies for one of 23 exemptions, which include but are not limited to financial services providers, insurance companies and certain tax-exempt entities.

Large operating companies that employ more than 20 full-time employees in the United States, maintain an operating presence at a physical office within the U.S. and filed a federal income tax return for the previous year demonstrating more than $5 million in gross receipts or sales are also exempt.

  • Small businesses with fewer than 20 employees and less than $5 million in gross receipts must file. This describes the vast majority of PPAI member firms.
  • Companies formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office also must file.
  • A domestic entity such as a statutory trust, business trust or foundation, as well as a foreign entity, must file only if it was created by the filing of a document with a secretary of state or similar office.

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For questions or suggestions on regulatory or government affairs issues, please contact Rachel Zoch at RachelZ@ppai.org.