Tax Byte
BOI Reporting Remains Voluntary: A Tale of Two Injunctions
FinCEN announced Friday morning that beneficial ownership information (BOI) reporting requirements remain voluntary, despite Thursday’s Supreme Court decision that might have suggested otherwise. The situation stems from two separate nationwide injunctions: while the Supreme Court lifted one (Texas Top Cop Shop v. Garland), another (Samantha Smith and Robert Means v. U.S. Department of the Treasury) remains in effect, creating an interesting regulatory scenario where compliance is optional but increasingly inevitable.
Implementation Timeline for the Corporate Transparency Act
Congress passed the Corporate Transparency Act (CTA) in 2021 as part of an anti-money-laundering initiative. FinCEN initially set a January 1, 2025 deadline for the estimated 32 million affected small businesses to file their BOI reports.
That deadline shifted to January 13 when FinCEN, in what could be characterized as an abundance of bureaucratic optimism, granted a brief extension. However, the Texas district courts had other plans. First came the injunction in Texas Top Cop Shop on December 3, 2024, followed by Smith v. U.S. Department of the Treasury on January 7, 2025—effectively transforming “mandatory” into “maybe later.” The Department of Justice has yet to file a notice of appeal in the Smith case.
Judicial Commentary
The Supreme Court’s January 23 ruling brought its own dramatic elements. Justice Neil Gorsuch, while supporting the stay of the Texas Top Cop Shop injunction, suggested the Court should address the broader question of whether district courts should wield the power of nationwide injunctions—a topic that could fill several seasons of constitutional law seminars. Justice Ketanji Brown Jackson’s dissent pointed out that the government’s claimed urgency seemed inconsistent with its leisurely four-year implementation timeline.
What to Expect Next
The next episode in this ongoing saga is scheduled for March 25, 2025, when a three-judge panel at the 5th U.S. Circuit Court of Appeals will hear oral arguments on the CTA’s constitutionality. Meanwhile, Treasury Secretary nominee Scott Bessent has begun the delicate task of balancing competing interests, acknowledging BOI’s value while promising to protect “law-abiding U.S. individuals and businesses” from unnecessary regulatory requirements.
Notes for Tax Professionals
The accounting profession remains actively engaged in guiding businesses through this transition. AICPA maintains a comprehensive BOI reporting resource center and continues its advocacy efforts alongside state CPA societies, and you can rely on Western CPE for continued updates and analysis as the situation evolves. Professional advisors are currently split between recommending proactive voluntary compliance and suggesting a more measured approach—a division that reflects the complexity of the current regulatory environment.
While uncertainty persists, businesses would be well-advised to begin preparing their beneficial ownership documentation. After all, when regulatory requirements do become mandatory, there’s nothing quite like the satisfaction of already having your paperwork in order.