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WASHINGTON––Consistent with the U.S. Department of the Treasury’s March 2, 2025 announcement, the Financial Crimes Enforcement Network (FinCEN) is issuing an interim final rule that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act.

In that interim final rule, FinCEN revises the definition of “reporting company” in its implementing regulations to mean only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction by the filing of a document with a secretary of state or similar office (formerly known as “foreign reporting companies”). FinCEN also exempts entities previously known as “domestic reporting companies” from BOI reporting requirements.

Thus, through this interim final rule, all entities created in the United States — including those previously known as “domestic reporting companies” — and their beneficial owners will be exempt from the requirement to report BOI to FinCEN. Foreign entities that meet the new definition of a “reporting company” and do not qualify for an exemption from the reporting requirements must report their BOI to FinCEN under new deadlines, detailed below. These foreign entities, however, will not be required to report any U.S. persons as beneficial owners, and U.S. persons will not be required to report BOI with respect to any such entity for which they are a beneficial owner.

For more information, see https://fincen.gov/news/news-releases/fincen-removes-beneficial-ownership-reporting-requirements-us-companies-and-us.

FinCEN announced that it will not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update beneficial ownership information (BOI) reports pursuant to the Corporate Transparency Act by the current deadlines. No fines or penalties will be issued, and no enforcement actions will be taken, until a forthcoming interim final rule becomes effective and the new relevant due dates in the interim final rule have passed.

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Following the February 18, 2025, decision by the U.S. District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336, the Financial Crimes Enforcement Network (FinCEN) has announced that beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act are back in effect, with a new deadline of March 21, 2025 for most companies.

FinCEN has also announced that it will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks. FinCEN 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.

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In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.

On January 23, 2025, the Supreme Court granted the government’s motion to stay a nationwide injunction issued by a federal judge in Texas (Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland). As a separate nationwide order issued by a different federal judge in Texas (Smith v. U.S. Department of the Treasury) still remains in place, reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.

On December 26th the merits panel of judges on the U.S. Court of Appeals of the Fifth Circuit vacated the motions panel of the same court’s decision of December 23rd and has reinstated the preliminary injunction against the government halting its enforcement of the CTA and the BOI filing requirements.

As those following this ongoing back and forth may recall, on December 3rd the District Court in Texas Top Cop Shop, Inc. v. Garland issued a nationwide preliminary injunction against the enforcement by the government of the CTA and its BOI filing requirements. The government appealed that decision and made an emergency motion to have the preliminary injunction lifted pending its appeal of the injunction. On December 23rd, the motion was granted and the filing requirements reinstated. On December 26th, the merits panel of judges on the U.S. Court of Appeals of the Fifth Circuit vacated the motions panel’s decision on the preliminary injunction reasoning that in order to maintain the constitutional status quo while the merits panel considers the substantive arguments to be set forth by both side in the appeal of the preliminary injunction, the preliminary injunction should remain in place.

This relief may be short lived. The merits panel of the Court of Appeals will be hearing the government’s appeal of the preliminary injunction issued by the district court on an expedited schedule. Once the merits panel has heard the appeal and had the opportunity to review the arguments of both sides, it could decide to lift the preliminary injunction.

What this all means that as of today 1/2/2025 the BOI reporting is now put on hold (AGAIN).  

You still however have the option to file. You can either visit http://boiefiling.fincen.gov to file your own report or you can engage the services of a company to assist you with the filing process. KVLSM will not be responsible for these filings. If you have previously filed there is nothing more that will need to be done on your part.

We will continue to monitor the case and the government’s responses and keep you posted.

On December 3rd, less than one month before the January 13th deadline for the filing of initial Beneficial Ownership Reports (“BOI Report”) required by the Corporate Transparency Act (“CTA”), a Federal Court in Texas issued a preliminary injunction applicable nationwide, halting enforcement of the reporting requirements under the law.

In his opinion in Texas Top Cop Shop, Inc. v. Garland, Judge Amos L. Mazzant III of the US District Court for the Eastern District of Texas found that the plaintiffs had met the burden of showing that the CTA is likely unconstitutional, and in light of the irreparable harm that would be faced by the plaintiffs and potential “Reporting Companies” nationwide, enjoined the enforcement of the CTA’s reporting requirements. In the opinion, Judge Mazzant III noted that the CTA seeks to compel disclosure of information about companies for law enforcement purposes, which he deemed had been demonstrated by the plaintiffs to be an impermissible leveraging of the Constitution’s Commerce Clause.

Despite issuing this preliminary injunction, the Court has made it clear that it has not made an affirmative finding that the CTA and its reporting requirements are contrary to law or that they amount to a violation of the Constitution.

An appeal has already been filed by the government following this decision. The current ramification of this injunction is that companies do not need to comply with the CTA and make a BOI filing as long as, the injunction is in place. If the Injunction is lifted in 2024, the filing deadline could be reinstated for December 31st or extended.

If you have previously filed there is nothing more that will need to be done on your part. If you have not already filed, we encourage you to have all relevant information readily available to file as this injunction may/can be lifted at any time.

You still have the option to file. KVLSM will be watching the response to this decision closely and will provide immediate updates should any become available.

In 2021, Congress passed the Corporate Transparency Act (CTA).  This act represents a significant change in the regulatory landscape for ALMOST ALL entities doing business in the United States.  The primary goal of the CTA is to enhance corporate transparency and combat financial crimes such as money laundering and the financing of terrorism.

The CTA introduced a new reporting requirement for Beneficial Ownership Information (BOI) to be filed with the Financial Crimes Enforcement Network (FinCEN).  Pursuant to this new requirement, reporting companies must disclose detailed information about their Beneficial Owners and Company Applicants.

• Reporting Companies that were created or registered to do business prior to January 1, 2024, must file their initial BOI report by December 31, 2024.
• Reporting Companies created or registered to do business in 2024, must file their initial BOI within 90 days of the effective date of their creation or registration.
• Reporting Companies created or registered to do business on or after January 1, 2025 must file their initial BOI within 30 days of the effective date of their creation or registration.

The CTA applies to a wide range of business entities, including corporations, limited liability companies (LLCs) including Single Member LLCs and other similar entities.  For more information on the new reporting requirements, FinCEN offers detailed and helpful guidance on BOI reporting.  You can visit https://www/fincen.gov/boi

NOTE:

We have been advised by the American Institute of Certified Public Accountants (AICPA), the New York State Society of CPAs (NYSSCPA) as well as our malpractice insurance carrier that compliance with CTA is not an accounting nor a tax function and is a legal task of your business.  Therefore, we have been informed that doing so could be construed as practicing law without a law license.

Your compliance with the Corporate Transparency Act (CTA) including beneficial ownership information (BOI) reporting is NOT within the scope of our engagement.  You have the sole responsibility for your compliance with the CTA, including its BOI reporting requirements and the collection of relevant owner information.  We shall have no liability resulting from your failure to comply with the CTA.  Consider consulting with legal counsel if you have questions regarding the applicability of the CTA’s reporting requirements and the issues surrounding the collection of relevant ownership information.

Dear Valued Clients,

Re: Important Update Regarding the Corporate Transparency Act (CTA)

I hope this letter finds you well. At KVLSM LLP, we value the trust and partnership we have built with our clients over the years, and we are committed to keeping you informed about important developments that may affect your business. Today, we would like to bring your attention to the upcoming implementation of the Corporate Transparency Act (CTA) and its potential impact on your operations.

The Corporate Transparency Act, which was passed by Congress in 2021 represents a significant change in the regulatory landscape for businesses across the United States. The primary goal of the CTA is to enhance corporate transparency and combat financial crimes, such as money laundering and the financing of terrorism. To achieve these objectives, the CTA introduces new reporting requirements that will apply to ALMOST ALL businesses, beginning in 2024.

 

Here are some key aspects of the CTA that you should be aware of:

1. Reporting Beneficial Ownership: Under the CTA, certain businesses will be required to report their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). This information includes details about individuals who own or control the company, helping to prevent the use of anonymous shell companies for illicit purposes.

 

2. Applicability: The CTA applies to a wide range of business entities, including corporations, limited liability companies (LLCs) including single member LLC’s, and other similar entities. The specific reporting requirements and exemptions may vary depending on your business’s size, structure, and activities.

 

3. Privacy and Security: We understand that privacy and data security are paramount concerns for our clients. Rest assured that we are committed to safeguarding your sensitive information and ensuring compliance with all relevant data protection regulations.

 

4. Information required to be reported:

Information for the Entity:

1. 1. Legal name and Trade name or DBA
   2. Address
   3. Jurisdiction formed in
   4. Federal ID Number

 

Information needed for all the Beneficial Owners (and/or controlling individuals):

1. 1. Name
   2. Address
   3. Birthdate
   4. Percentage of beneficial ownership
   5. Identifying Number from a Driver’s License or other approved document
   6. Image of that document that the number is from (e)

 

5. If you form a Corporation, S-Corporation, Partnership, or Limited Liability Company (LLC) (either Multi-member or Single-Member LLC) at any time in 2024 OR if you change the ownership of an existing entity listed above, or if there is a change to the personal information of any beneficial owner (name, address or ownership %), you will have a filing due to FINCEN within 90 days of the date of that change.

 

At KVLSM LLP, we are actively monitoring developments related to the CTA and working to ensure that our clients are aware of this new regulatory filing requirement.  Currently, the exact filing procedures are not yet finalized.

As the implementation of the CTA progresses, we will continue to provide you with updates, guidance, and resources to help you remain in compliance and minimize any potential disruptions to your business operations.

Thank you for entrusting KVLSM LLP with your business needs. We value our relationship with our clients and remain dedicated to helping you succeed in this evolving regulatory landscape.

Sincerely,

KVLSM LLP

In a recent news release, the IRS issued a warning to taxpayers to be careful about donating to fake charities. While this has always been an issue to some extent, the problem has become more acute of late, as dishonest people look to take advantage of disasters and crises around the world. The IRS advises that you should always check to see if a charity is legitimate before donating money to them.

What Are Fake Charities?

In many ways, a fake charity is exactly what it sounds like: someone purports to represent a charitable organization that either does not exist, or pretends to represent a real charity they are not a part of. These fake charities work hard to convince people to donate to them, and tend to pop up more often in the wake of natural disasters, wars, and other crises. To accomplish this goal, they will use a variety of means to fake legitimacy, including using fake websites, falsified emails, or even “spoofed” phone numbers to make it look like they represent a legitimate organization.

What Are the Dangers of Donating to Fake Charities?

There are three primary dangers that can arise from donating to a fake charity. The first is, of course, that the fake charity takes your money and runs off with it, depriving you of your hard earned wealth for their personal enrichment. The second is that they steal your personal information, such as your credit card details, facilitating identity theft. Finally, you may potentially get into trouble if you try to claim a charitable donation on your taxes that was not made to a recognized tax-exempt charity.

What Are the Signs of a Fake Charity?

There are a few signs that you may be dealing with a fake charity:

• First, you should always be wary of someone seeking charitable donations who seeks more information than they actually need, such as someone who asks for both money and personal identifying information.
• Second, you should always be suspicious of someone who engages in high-pressure tactics to convince you to donate immediately, rather than coming back at another time, which may be indicative of an attempted “sale” rather than a legitimate solicitation.
• Finally, you should always be suspicious of a charity that seeks donations through non-traditional means, such as by wiring money or buying gift cards.

What Should You Do if You Encounter a Fake Charity?

If you encounter a charity and are not certain of its legitimacy, you should first check to see if it is actually registered as a tax-exempt organization through the IRS Tax Exempt Organization Search. If they do not come up, there is a good chance they are not a legitimate charity. If you discover such an organization, you can report them to the FBI’s Charity and Disaster Fraud unit.