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BOI Update February 8, 2025
Front of the U.S. Supreme Court The Supreme Court acted in the Texas Top Cop Shop case and reversed the injunction of the Fifth Circuit regarding the BOI report, but you still don’t have to file yet because of another case, Smith v Treasury. In the appeal for Smith v Treasury filed Wednesday, Treasury has indicated that should the injunction be stayed, which is very likely given the Supreme Court’s action, the new deadline for BOI reporting will be 30 days later, and Treasury may consider modifying the reporting to reduce the burden on “low-risk” entities. Therefore, absent any other action, we should expect a new BOI reporting deadline between the middle and end of March.
The Corporate Transparency Act empowers FinCEN’s ability to collect the Beneficial Ownership Report (BOI) to identify any individual that has 25% or more beneficial interest in an entity, including a small business or an irrevocable trust. The BOI had been blocked by a preliminary injunction from the Fifth Circuit pending the outcome of a hearing in the case Texas Top Shop. That hearing has a briefing schedule for most of February with oral arguments scheduled on March 25th and a decision months later. The Department of Justice appealed to Supreme Court Justice Samuel Alito, who supervises the Fifth Circuit, to lift that injunction. On January 23rd, Justice Alito lifted that injunction and the Texas Top Shop case no longer bars FinCEN from demanding the BOI report. This ruling does not address the constitutionality of the BOI, only the question of whether a federal district judge can bar FinCEN from collecting the BOI report. The Courts generally disfavor nationwide injunctions coming from individual district courts.
However, another federal judge in Texas in another case called Smith v Treasury has also issued a preliminary nationwide injunction baring FinCEN from demanding the BOI. This injunction for Smith v Treasury was appealed to the Fifth Circuit Wednesday, and the likely result is the injunction will not hold given the precedent from Texas Top Cop Shop. The current notice from FinCEN states that they will continue to respect the injunction from Smith v Treasury and no filing is presently required until the next action by the Courts. Given this recent filing, a new date would be 30 days out from anything issued by the court.
Enter Congress with the Repealing Big Brother Overreach Act. H.R. 8147 seeks to repeal the Corporate Transparency Act that initiated the BOI reporting. This bill was initiated in April 2024 by the 118th Congress, which means it died when the second session ended in December. However, 100 Representatives signed onto the bill. The Senate version S.4297 attracted 18 co-sponsors. In both cases, the last sponsors signed on in December 2024 just before session ended. So there appears to be support to take some action on repealing it. To date, the 119th Congress has not yet put forward a bill duplicating H.R. 8147.
