Nationwide interest increased efforts to stop the national requirement for filing a BOI report so, is BOI filing still required? This is one of our Blog Planning articles. So, keep reading about a single case won in Alabama in March, 2024 and recent actions in Texas deciding a nationwide action as a preliminary injunction. And, be sure to see the list of related articles and videos that cover tons of details.
What is the BOI Report?
A BOI Report is an acronym for Beneficial Ownership Information Report. It’s also known as a BOI filing or the BOIR. It’s a requirement to file initially and for certain updates to some companies & LLCs. And the original intent was to make it harder for criminals to launder money and hide financial assets through the creation of “shell companies” as LLCs, for example.
The original intent of the BOI Filing requirement was to make it more difficult for criminals from laundering money and hiding financial assets through the creation of “shell companies” like LLCs.
It started as a part of the CTA (Corporate Transparency Act). From the ABA (American Bar Association), here’s a summary introductory article in 2021 on it. The American Bar Association: “The Corporate Transparency Act – Preparing for the Federal Database of Beneficial Ownership Information“.
Here’s the federal government’s BOIR FAQ (Frequently Asked Questions). It’s a great set of a lot of popular questions & answers on this topic.
Is BOI Filing Still Required, Paused, or Stopped? What Happened?
There have been some individual cases around the country objecting to this so, many are wondering “Is BOI filing still required?” However, on December 4th, 2024, several news sources and podcasts had information conveying that a federal district court judge in Texas issued a nationwide preliminary injunction on BOI filing. That doesn’t mean it’s final. So, keep reading for more details from various sources.
Blocking BOI Reporting Requirements
There are several reasons behind wanting to stop the BOIR requirements. Also, there have been several federal cases on this topic so, keep reading to see more.
Why Stop the CTA and the Requirement to File a BOI Report?
There is a mix of various sources attempting to go through court cases to block the CTA or its requirement of the BOI Report filing. The initial intent of the requirement was portrayed as a goal to reduce criminal elements from money laundering and hiding assets. However, there are some negatives and backlash for various reasons and here are some of them.
1. The BOIR Is Too Much Federal Control
There are some large concerns of federal authorities overstepping their bounds. Some concerns involve excessive federal control and it was felt it should be more at the state level at least, if any at all.
2. The Requirements of Filing a BOI Can Be A Burden To Small Businesses
To file this BOIR requires some understanding of technology if it’s done online. Some might require a scanner or knowledge how to take a quality pic of a document, etc. Also, the gathering of all the needed information isn’t readily available or handled by the person designated to file. So, a lot of internal communication and delays of getting the info is costly. Many might not want the filer to have the business owners’ confidential information. So, all of this is quite a burden on small businesses.
3. Privacy Concerns of Access to Beneficial Ownership Information
It’s always a concern about all the government agencies who would have access to confidential businesses details. While the technical security might be in place, it’s a worry of the human aspects of abusing that private data access. Some of the privacy concerns for business data were discussed in the initial development and deployment of CTA and BOI. From the Financial Services Committee in the House of Representatives, here’s a December, 2023 article on that topic: “McHenry Statement on FinCEN’s Final Rule Regarding Access to Beneficial Ownership Information“.
Court Cases of BOI and the Preliminary CTA Court Injunction
Back in March, 2024 on the FinCen.gov site, a judgment for one case regarding a “National Small Business” entity was reported. The nature of exceeding Constitutional limits was referenced. Shortly after the case judgment in favor of “National Small Business”, a notice of appeal was filed for the federal side.
Source (FinCen.gov/boi): “On March 1, 2024, in the case of National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.), a federal district court in the Northern District of Alabama, Northeastern Division, entered a final declaratory judgment, concluding that the Corporate Transparency Act exceeds the Constitution’s limits on Congress’s power and enjoining the Department of the Treasury and FinCEN from enforcing the Corporate Transparency Act against the plaintiffs.”
On December 4, 2024, the Texas Bankers Association reported: “Federal court in Texas halts beneficial ownership reporting rule“. They also provided a PDF copy of the granted preliminary injunction.
A Texas Federal District Court issued a preliminary injunction against the CTA (involves the BOI filing requirements also).
Also, regarding the December 4, 2024 ruling, the NFIB (National Federation of Independent Business) reported “A Small Business Victory! NFIB Lawsuit Ruling Blocks Beneficial Ownership Reporting Requirements“.
News on BOI Requirements Rulings
Individual podcasts and online articles have covered the BOI reporting requirements topic in detail, especially with court rulings regarding changes that impact small businesses. Here are some of those.
- National Federation of Independent Business: NFIB Prevails in Blocking Burdensome Beneficial Ownership Requirements for Small Businesses
- Fredrickson Law Firm: Texas Court Issues Nationwide Injunction on Corporate Transparency Act
- Instagram Video: BOI Reporting Banned Until Further Notice by Tamarra Allen, PhD
Conclusive Answer: Is BOI Filing Still Required?
As of Dec. 15, 2024, FinCen site (BOI section) added to their Alert list that it’s “not currently required“. To see the details on that page’s section, tap the alert named like “Alert: Impact on Ongoing Litigation…“. So, to be clear, check the FinCen’s BOI section of their site for the latest announcements. However, also check with your legal or tax professional on current and ongoing answers to “Is BOI filing still required?”. Also, as of December 5, 2024, there is nothing stopping the filing of the BOI online, even though there was a preliminary CTA court injunction. And, it’s even state that “companies may continue to voluntarily submit beneficial ownership information reports“. So, check it out in our article of How To File Your own BOI Report step-by-step. When you do your own, it’s free.
