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Important Update: Federal Reporting Requirement for Business Entities Back in Effect

By MNR News posted 18 days ago

  
Recent Federal Court actions allow FinCEN to proceed with enforcement of Beneficial Ownership Information (BOI) Reporting Rule

Update on BOI Reporting Enforcement:
The Financial Crime Enforcement Network's (FinCEN) Beneficial Ownership Information reporting rule and requirements as mandated by the Corporate Transparency Act (CTA) are back in effect. A Texas federal court in the Smith et al. v. U.S. Department of Treasury case lifted the injunction halting FinCEN's actions related to the Beneficial Ownership Information Reporting Rule. The Texas federal court's actions are in alignment with the Supreme Court's decision in the Texas Top Cop Shop, Inc. order lifting a nationwide injunction related to the CTA. Actions by the Supreme Court and the Texas federal court will now allow FinCEN to proceed with further implementation and enforcement of the Beneficial Ownership Information Reporting Rule.  

FinCEN has announced that it is extending the compliance deadline to March 21, 2025, for reporting companies and entities to file initial BOI reports or to update and correct a BOI report. FinCEN is providing entities with additional time due to current litigation. FinCEN has also noted that it "intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses." 

About BOI Reporting 

If you operate your real estate business as a legal entity (e.g., LLC, corporation), this important federal reporting requirement may apply to your business.  

Under the Corporate Transparency Act (CTA), certain business entities must report information about their beneficial owners to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).  

This process is referred to as Beneficial Ownership Information (BOI) reporting. 

Who or what is a “Beneficial Owner”? 
A beneficial owner is an individual who either directly or indirectly: 
(1) holds significant control over the reporting company, such as a senior officer or key decision-maker, or  
(2) owns or controls 25% or more of the company’s ownership interests. If a corporate entity owns a stake in the company, its ultimate owners are assessed to determine if they meet the 25% ownership threshold. 

Who needs to report? 
Most LLCs, corporations, and other similar entities will need to comply, except for businesses that meet certain exemptions, such as larger companies with more than 20 employees and $5 million in annual revenue. 

What are the BOI reporting deadlines? 
For the vast majority of reporting companies, the new deadline to file an initial, updated, and/or corrected BOI report is now March 21, 2025. FinCEN will provide an update before then of any further modification of this deadline, recognizing that reporting companies may need additional time to comply with their BOI reporting obligations once this update is provided. 

Why Does this matter? 
Failure to comply with BOI reporting can result in civil penalties of $500 per day (adjusted for inflation to $591 per day) and criminal penalties, including a fine of up to $10,000 and/or imprisonment for up to two years. 

Next Steps 

  1. Determine if this reporting requirement may apply to your real estate business. 

  1. Consult your legal or financial advisor to ensure compliance. 

  1. Review FinCEN’s guidance on the reporting process. 

For more key insights on the BOI reporting requirement read this: 5 Fast Facts on Beneficial Ownership Information Reporting. 

MNR will continue to provide insight and updates as it relates to the Beneficial Ownership Information Reporting Rule and the Corporate Transparency Act (CTA). 

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