As businesses, particularly those in the real estate industry, continue to grapple with the evolving legal landscape, including the Corporate Transparency Act (CTA), it is critical to know that based on the recent Feb. 18, 2025 court ruling, the injunction has been lifted. This means that businesses will need to complete their FinCEN BOIR by the new deadline - i.e., March 21, 2025.
Businesses should understand the fundamental requirements to complete FinCEN BOIR to avoid severe penalties, especially once a company receives actual notice of its reporting obligations. Specifically, real estate companies, which commonly have complex ownership structures, should gather their legal documents and prepare and complete the FinCEN BOIR as soon as possible.
Key Legal Updates
Several court rulings have shaped the FinCEN BOI reporting landscape, creating a complex and evolving compliance framework. Below are the key legal milestones:
- Dec. 3, 2024: A Texas federal court issued a nationwide preliminary injunction (Texas Top COP Shop, Inc. v. Merrick Garland), effectively pausing enforcement of FinCEN BOI reporting requirements.
- Dec. 23, 2024: The Fifth Circuit granted a Department of Justice (DOJ) stay, extending the compliance deadline to March 21, 2025.
- Dec. 26, 2024: The Fifth Circuit vacated the stay, reinstating the original injunction and once again halting enforcement.
- Jan. 23, 2025: The U.S. Supreme Court lifted the Dec. 3, 2024, injunction for Texas Top COP Shop, Inc., but FinCEN BOI reporting remained on hold due to a separate case.
- Jan. 24, 2025: FinCEN stated that the requirement to submit ownership information to FinCEN remains on hold due to a nationwide injunction that is still in effect.
- Feb. 18, 2025: The U.S. District Court for the Eastern District of Texas lifted the nationwide injunction, meaning businesses must again comply with the CTA and complete FinCEN BOI reporting. The new deadline is March 21, 2025, based on FinCEN's recent actual notice.
What is a FinCEN BOI Report?
The FinCEN Beneficial Ownership Information (BOI) reporting requires filing with FinCEN the key information about an entity and who ultimately owns and/or controls it. The Corporate Transparency Act (CTA) is designed to enhance transparency and combat money laundering and other illicit activities under the oversight of the Financial Crimes Enforcement Network. Real estate companies may face extra scrutiny because their ownership structures are usually complex and can be viewed as a way to hide the actual ownership of the real estate assets.
The CTA, which applies to every reporting company created, took effect on January 1, 2024. Due to recent legal rulings, the compliance deadline has been extended to March 21, 2025. Failure to file on time may lead to penalties, making timely submission essential for real estate companies.
Why Does FinCEN BOIR Matter in the real estate sector?
Ownership of real estate is perceived as a way to conduct certain illegal activities. In addition, real estates are usually owned by individuals utilizing complex multi-layer entities and/or trusts. Therefore, the CTA's requirements of transparency in the entity's ownership structures are designed to specifically apply to the real estate sector.
The real estate sector can be under additional scrutiny for compliance with the CTA. Therefore, real estate companies should file FinCEN BOIR accurately before FinCEN's deadline.
Information required to report when filing the FinCEN BOIR
Making sure that the necessary information is current and accessible is a crucial component of getting ready for compliance. Both entity-level and individual-level information must be disclosed by real estate businesses through the FinCEN BOIR. The following is a list of details that a company required to comply with FinCEN BOIR must provide.:
- Entity Information: This includes the legal name, formation date, jurisdiction of incorporation, business address, Employer Identification Number (EIN), and the company applicant(s) for entities established after January 1, 2024—all key details related to the company's beneficial ownership information.
- Beneficial Ownership Information: Initial beneficial ownership information includes details about individuals who have substantial control over an entity, such as managers or officers, or those who own at least 25% of the business. The required information for each beneficial owner includes:
- Full Legal Name
- Residential Address
- Date of Birth
- Passport or Government-Issued ID Number: A copy of a valid passport or driver's license along with reporting the ID's number and where it was issued.
Any changes to the information that has been initially filed with FinCEN must be updated and filed again with FinCEN within 30 days of such changes.
It is important that the information filed for FinCEN BOIR is accurate and is reflected on the applicable legal documents of the entity.
Who Needs to Comply with FinCEN BOI Reporting Requirements?
All reporting companies created or registered in any U.S. state must adhere to FinCEN BOI reporting requirements, though reporting company exemptions apply in 23 specific cases. While certain real estate parent companies may qualify for these exemptions, most joint venture entities do not. As a result, real estate companies should consult legal professionals well-versed in the CTA to assess whether each entity meets the necessary exemption criteria.
Common Exemptions for Real Estate Companies (just as an example):
- Large Operating Companies (Must meet all three criteria for the specific reporting entity):
- Employ 21 or full-time employees.
- Generate and report to the IRS $5 million or more in annual revenue of the previous year.
- Maintain a physical office in any of the states within the U.S.
- Pooled Investment Vehicles and Venture Capital Fund Advisers
- This requires a thorough legal analysis to determine eligibility for exemption.
Even if an entity qualifies as one of the exempt entities, its subsidiaries and joint ventures are not automatically exempt.
Deadlines for Filing a FinCEN BOI Report
The latest filing deadlines are as follows:
- Entities formed before or during 2024: Must file by March 21, 2025.
- Entities formed after January 1, 2025: Must file within 30 days of formation.
- FinCEN has provided extensions to the deadlines based on certain disaster relief measures. Consult a lawyer to evaluate whether such extensions apply to your entities.
FinCEN BOIR Compliance Checklist for Real Estate Companies
To simplify compliance, real estate companies can follow the following checklist:
- Gather necessary documentation (e.g., formation documents such as articles of formation, and ownership agreements such as operating agreements or bylaws).
- Review the legal documents.
- Analyze ownership percentages and who are the managers and certain officers to determine who are the beneficial owners to be reported for each entity.
- Collect all of the beneficial owners' information and copies of their identifications.
- Ensure consistency between legal documents and the information to be included in the FinCEN BOI report.
- File the information with FinCEN before the deadline and maintain records of submissions.
- Receive FinCEN ID and a transcript from FinCEN evidencing the completion of the filing.
- Keep the transcript for future update filing.
Common Pitfalls to Avoid
- Do NOT guess —do not guess who are the beneficial owners. Your analysis should be based on the legal documents and the CTA requirements. For complex ownership structures, you should not perform analysis by yourself. It is crucial that your FinCEN BOIR contains accurate information that will be consistent with your legal documents. Please consult lawyers who have studied the CTA.
- Do NOT under-reporting—when in doubt, over-reporting is preferable.
- Keeping legal documents in records—ensure you have backup legal documentation in the event of any audits from FinCEN in the future.
Penalties for Failing to Meet FinCEN BOI Reporting Requirements
Failure to comply with FinCEN BOI reporting requirements can result in both civil and criminal penalties:
- Civil Penalties: $591 per day for late or incomplete filings.
- Criminal Penalties: Fines up to $10,000 and/or up to two years in prison.
- Additional Consequences: Misreporting or falsifying FinCEN BOI data could lead to further legal repercussions.
Find a Legal Advisor with the Expertise You Need
Exploring FinCEN BOIR compliance can be challenging, particularly for real estate companies with complex ownership structures. Relying on qualified legal advice can prevent unnecessary legal consequences and mistakes. Lawyers who have studied the CTA can:
- Analyze whether an entity qualifies for any of the 23 exemptions.
- Identify and determine who are the beneficial owners for each entity.
- Ensure accurate and complete filings.
- Provide ongoing support for regulatory changes.
Services and Industries SeedJura Support
SeedJura.CO, a tech-enabled compliance platform created and backed by our lawyers, offers a streamlined solution for FinCEN BOI reporting. The platform provides:
- Preparation of required information to be reported.
- Automated BOI analysis to determine who are the beneficial owners based on the CTA.
- Direct authorized API filing with FinCEN - SeedJura is a FinCEN-authorized API participant.
- Affordable pricing: $10 for preparation, $89.99 per entity for analysis and filing (first entity free).
- Legal oversight of the entire process, including filing, creation, or registration of a company and other similar entities, ensuring compliance with actual or public notice requirements.
By utilizing SeedJura.CO, real estate companies can efficiently fulfill their FinCEN BOI reporting obligations and mitigate regulatory risks at a fraction of the cost of traditional legal services.
Conclusion
The Corporate Transparency Act requires businesses to complete FinCEN BOI reporting. With the new deadline - March 21, 2025, real estate companies should prepare and file as soon as possible. This means understanding the reporting requirements, gathering the necessary documentation, analyzing which are the reporting entities and who are the beneficial owners, and ensuring that all filings are accurate and timely. By engaging lawyers or utilizing platforms backed by lawyers like SeedJura.CO, real estate companies can stay ahead of the curve and avoid costly penalties.
Now is the time for real estate businesses to take action—SeedJura is here to help. Contact SeedJura.CO, today!
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