The U.S. Supreme Court is allowing the Financial Crimes Enforcement Network (FinCEN) to penalize entities for not filing required beneficial ownership information (BOI) reports, however, a separate nationwide federal district court injunction remains.
Companies are not currently required to file BOI reports despite the Supreme Court order.
In a statement released today, FinCEN said a temporary injunction issued on Jan. 7 remains in place, barring it from enforcing BOI reporting requirements.
Due to the Jan. 7 order issued by the Eastern District of Texas in Smith v. U.S. Department of the Treasury, FinCEN says reporting companies are still not subject to liability for failing to submit timely BOI reports while the court considers the case. However, FinCEN notes that reporting companies may still voluntarily submit reports.
It is not clear whether the U.S. government will appeal the Smith order or let the injunction barring BOI enforcement to remain in place.
The U.S. Supreme Court’s Jan. 23 order allowing FinCEN to move forward with enforcement of BOI reporting requirements under the Corporate Transparency Act (CTA) addressed a temporary injunction issued by the U.S. Court of Appeals for the 5th Circuit in a separate case. The Eastern District of Texas judge hearing the Smith challenge to the CTA and its BOI reporting requirements claimed a separate injunction was warranted due to the uniqueness of the parties and the different arguments presented in the Smith case.
As this situation evolves, we recommend that business owners subject to this reporting maintain contact with your tax and legal professionals. Businesses have two options under the current climate.
- Prepare and voluntarily file BOI reports now to stay ahead of potential compliance deadlines and reduce future risks.
- Wait until the courts provide further clarity regarding the Smith case and the injunction.
We recommend that you advise clients to gather the information necessary to complete their BOI reports in the event the injunction is lifted.
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