Beneficial Ownership Reporting Requirements Back on Hold – For Now

Legal
Published

Federal appellate courts are deciding whether private companies must comply with beneficial ownership reporting requirements. As a result of a post-Christmas court decision, companies currently do not have to file beneficial ownership reports with the U.S. Treasury. But the situation is fluid and could change at any time.

Background

If you create or have created a corporation, limited liability company (LLC) or other similar entity by filing a document with a Secretary of State or similar office, you may be required to file beneficial ownership information with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) under the Corporate Transparency Act (CTA).

You are subject to this beneficial ownership reporting if your company has 20 or fewer employees and did not file a federal income tax return reflecting more than $5 million in gross sales or receipts in the previous year.

5th Circuit Court Has Overturned Reporting Requirements – For Now

On Dec. 26, 2024, the U.S. Court of Appeals for the Fifth Circuit reinstated a nationwide preliminary injunction barring enforcement of the CTA and its associated beneficial ownership reporting rule.

The ruling temporarily prohibits FinCEN from enforcing the rule and its small business information reporting requirements. Therefore, reporting companies have no obligation to comply with the reporting deadlines, regardless of when the company was formed.

But the situation remains fluid. Six separate cases are pending in the federal court system challenging the constitutionality of the CTA, including a leading case out of the Eleventh Circuit where oral arguments were held on Sept. 27, 2024, and a decision is pending. Furthermore, on New Year’s Eve, the Department of Justice filed an emergency application with the U.S. Supreme Court requesting a stay (put on hold) of the nationwide injunction reinstated by the Fifth Circuit.

Meanwhile, FinCEN continues to accept voluntary beneficial ownership information reports.

NAHB encourages those small businesses that elect not to file in light of the reinstatement of the preliminary nationwide injunction to gather the necessary filing information, and be prepared to file in case the injunction is lifted or the government is successful in its appeal.

Subscribe to NAHBNow

Log in or create account to subscribe to notifications of new posts.

Log in to subscribe

Latest from NAHBNow

Sustainability and Green Building

May 14, 2025

Department of Energy Remodels Annual Student Building Design Showcase

The annual BuildingsNEXT Team Showcase, formerly known as the Solar Decathlon, was held last month in Golden, Colo. This collegiate design competition prepares the next generation of building professionals to design high-performance buildings powered by renewables.

Regulations

May 14, 2025

NAHB Submits Extensive Deregulatory Recommendations to OMB

On May 12, NAHB submitted a comprehensive framework of deregulatory recommendations to the Office of Management and Budget (OMB) that covers several federal agencies that encompass a host of regulations affecting the residential construction industry.

View all

Latest Economic News

Economics

May 14, 2025

Permit Activity Declines in March 2025

Permits continue a downhill trend for the third month in a row. Over the first three months of 2025, the total number of single-family permits issued year-to-date (YTD) nationwide reached 232,221. On a year-over-year (YoY) basis, this is a decline of 3.8% over the March 2024 level of 241311. For multifamily, the total number of permits issued nationwide reached 113,344. This is 3.7% below the March 2024 level of 117,695.

Economics

May 13, 2025

Inflation Eased Again in April

Inflation slowed to a 4-year low in April while shelter inflation remained elevated. Despite the easing, inflation may pick up in the coming months as possible inflationary pressure from enacted tariffs and other policy uncertainties continues to threaten economic growth and complicate the Fed’s path to its 2% target.

Economics

May 13, 2025

Residential Mortgages Experience Weaker Demand in First Quarter

Overall demand for residential mortgages was weaker while lending standards for most types of residential mortgages were essentially unchanged according to the Federal Reserve Board’s April 2025 Senior Loan Officer Opinion Survey (SLOOS).