FinCEN hints at BOI reporting changes in court filing

The Financial Crimes Enforcement Network (FinCEN) will consider changes to the beneficial ownership information (BOI) reporting requirements if a court grants the government’s request for a stay of a nationwide injunction in a Texas case, according to a motion filed Wednesday.

If the stay is granted, FinCEN will extend BOI filing deadlines for 30 days, the government said in its filing in Samantha Smith and Robert Means v. U.S. Department of the Treasury, No. 6:24-CV-336 (E.D. Texas 1/7/25).

“During that period, FinCEN will assess whether it is appropriate to modify the [Corporate Transparency Act’s (CTA’s)] reporting requirements to alleviate the burden on low-risk entities while prioritizing enforcement to address the most significant risks to U.S. national security. Staying the grant of preliminary relief will help facilitate that process,” said the request from the Department of Justice (DOJ), which was accompanied by a notice of appeal.

The government’s motion asks the federal district court for the Eastern District of Texas to lift its nationwide injunction in Smith while the case is under appeal. The government cited the Supreme Court’s decision to set aside another nationwide injunction involving BOI reporting requirements in Texas Top Cop Shop, Inc. v. Garland, No. 4:24-CV-478 (E.D. Texas 12/3/24).

Alternatively, the government asked the district court to modify its injunction so it applies only to the plaintiffs in the case. On Monday, the court gave the plaintiffs a deadline of 5 p.m. on Friday, Feb. 14 to file a response to the government’s motion.

In a LinkedIn post, Melanie Lauridsen, the AICPA’s vice president–Tax Policy & Advocacy, said, “We are encouraged by FinCEN’s intention to provide a 30-day filing extension for the BOI report in the event the injunction is lifted; however, we urge FinCEN to consider a longer extension period to appropriately account for the lack of awareness and confusion around the filing status.”

“The AICPA continues to maintain its advice that those assisting clients with BOI report filings gather the required information from clients and be prepared to file the BOI report if the injunction is lifted again,” Lauridsen’s post continued.

In its motion to lift the injunction, the government notes that the details of the reporting requirements were set administratively by FinCEN in a final rule, rather than being specified by Congress in the CTA.

“As a matter of policy, Treasury continues to assess the potential burden of the Final Rule. If this Court grants the stay, … FinCEN intends to assess its potential options to prioritize reporting for those entities that pose the most significant national security risks while providing relief to lower-risk entities and, if warranted, amending the Final Rule,” the motion states.

On its website, FinCEN confirmed DOJ’s statement about a 30-day extension if the court stays the nationwide injunction and its plan to reassess reporting companies required to file BOI reports.

In the meantime, reporting companies are not required to file BOI reports, FinCEN said.

FinCEN estimates that the CTA, P.L. 116-283, which includes the BOI reporting requirements, covers 32 million small businesses.

The Texas Public Policy Foundation, which represents the plaintiffs in the Smith case,  will oppose the government’s request for a stay, said Chance Weldon, a senior attorney and director of litigation for the foundation’s Center for the American Future.

Other court cases

Previously, the DOJ appealed to the Eleventh Circuit a decision of an Alabama district court that the CTA is unconstitutional. In that case, however, the court said the order applied only to the plaintiffs named in the case. The Eleventh Circuit heard oral arguments in the case in September.

FinCEN has noted that district courts in Virginia, in Community Associations Institute v. Yellen, No. 1:24-cv-1597 (E.D. Va. 10/24/24), and in Oregon, in Firestone v. Yellen, No. 3:2024cv01034 (D. Ore. 9/20/24), have denied requests to enjoin the CTA, finding that the plaintiffs were unlikely to succeed with their constitutional arguments.

Background

Under the CTA, which Congress passed in 2021 as an anti-money-laundering initiative, reporting companies must disclose the identity and information about beneficial owners of the entities. For new entities incorporated after Jan. 1, 2024, reporting companies must also disclose the identity of “company applicants” — defined as any individual who files an application to form a corporation, limited liability company, or other similar entity.

Most reports were originally due by the start of 2025; however, FinCEN pushed that date to Jan. 13, a deadline that the injunction made null.

Willful violations are punishable by a fine of $606 a day, up to $10,000, and two years in prison with similarly serious penalties for unauthorized disclosure.

AICPA advocacy

The AICPA and state CPA societies have written numerous letters to Congress and FinCEN, urging a delay in the reporting deadline.

The AICPA regularly updates its BOI reporting resource center.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.