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Appeals court reinstates injunction that halts BOI enforcement
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A federal appeals court on Thursday reinstated a nationwide injunction halting enforcement of beneficial ownership information (BOI) reporting requirements, reversing an order the same court issued earlier this week.
In its latest order, the Fifth Circuit Court of Appeals said it was reinstating a lower court’s injunction “in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments,” referring to the panel of judges who will decide the appeal.
The AICPA has been urging the government to postpone the original Jan. 1, 2025, BOI reporting deadline. The requirements are imposed by the Corporate Transparency Act (CTA) and enforced by the Financial Crimes Enforcement Network (FinCEN).
In a statement Friday, the AICPA said it “is seeking guidance from FinCEN and maintains its advice for those assisting clients with BOI filings to gather information required from clients and be prepared to file in case the injunction is lifted again.”
Later on Friday, FinCEN issued an updated alert on its BOI information page, saying that companies can voluntarily submit BOI reports.
“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,” the FinCEN alert said. “However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
On Dec. 3, a federal district court in Texas issued the injunction in Texas Top Cop Shop, Inc. v. Garland, No. 4:24-CV-478 (E.D. Texas 12/3/24). Under the injunction, the CTA and the BOI reporting rule could not be enforced, and reporting companies would need not comply with the Jan. 1, 2025, BOI reporting deadline pending a further order of the court.
The Department of Justice (DOJ) appealed the injunction to the Fifth Circuit.
On Monday, a panel of the Fifth Circuit granted the DOJ motion to lift the injunction. A different panel of judges reversed that order Thursday.
Under the CTA, P.L. 116-283, which Congress passed in 2021 as an anti-money-laundering initiative, reporting companies must disclose the identity of and information about beneficial owners of the entities. For new entities incorporated after Jan. 1, 2024, reporting companies must also disclose the identity of “applicants” — defined as any individual who files an application to form a corporation, limited liability company, or other similar entity.
The AICPA is regularly updating its BOI reporting resource center.
— To comment on this article or to suggest an idea for another article, contact Neil Amato at neil.amato@aicpa-cima.com.