Main Street Business

#555 BOIs on Hold AGAIN - 5th Circuit Reverses Itself on 12/27/24

• Mark J Kohler and Mat Sorensen

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BOIs on Hold Again - 5th Circuit Reverses Itself on 12/27/24. A big win for small businesses in this court saga. Going live to get into what this means for you! This case has been moving fast so if you haven't filed your BOIs for your LLCs or corporations make sure your subscribed and catching the latest updates to stay in compliance. If you need help completing your BOI report (and are done with the Court theatrics) my company Main Street Business Services can help you! Find them at https://www.mainstreetbusiness.com/contact 

Subscribe to my Youtube Channel to keep up with BOI updates! https://www.youtube.com/@MatSorensen

Speaker 1:

Welcome everyone to the Main Street Business Podcast. This is Matt Sorensen. We have a really important update for those of you with LLCs and corporations. This BOI requirement we've been tracking. I wanted to make sure I gave you the update on it. Please enjoy this recording of my latest update and what you need to know about for BOIs for your LLC and corporation.

Speaker 1:

The Fifth Circuit Court of Appeals has just reversed itself. Bois are now unconstitutional again. I know this may seem crazy. This has been a whipsaw. It's been going back and forth, but on December 27th today, the Fifth Circuit Court of Appeals reversed the December 23rd order that reinstated BOIs and that said BOIs are constitutional. So what is the status right now? The status right now is you don't have to file a BOI if you don't want to. The injunction that was put in place earlier in December by a federal district court judge in Texas in the Top Cop Shop case, which basically said FinCEN, you cannot enforce this BOI requirement for LLC and corporations to require them to file this business ownership information report to the federal government. You cannot force them to do it. You cannot penalize them. That requirement and law is unconstitutional. That was the Texas case. We reported on this. I went, put videos, we put a lot of content out on this, letting business owners know our clients that you didn't have to file this. Well, on December 23rd, right before Christmas Eve, a Fifth Circuit panel of three judges said nah, this is actually constitutional and you have to file it. December 27th, the Fifth Circuit comes back and says actually, this is unconstitutional and this is a fifth circuit. Merit panel is what they're called, and essentially what happened here is this got fast-tracked to the fastest motion calendar in the fifth circuit on december 23rd, a three-judge panel is who ruled it constitutional and brought bois back. So the lay of the land right now is you do not need to file a boi now.

Speaker 1:

Now there's a ton of questions. What's going to happen next? Does the Fifth Circuit still have this? Does this go to the US Supreme Court? What are the other courts doing on this around the country? What's happening in Congress? Has Trump commented on this? What if I already filed a BOI? I'm going to hit those questions for you here. Okay, that's what I'm thinking. That's the questions I've been getting from clients and business owners across the country. But make no mistake, this is a big win for small business owners today.

Speaker 1:

The national injunction, the Texas court order is back in effect and that essentially means you do not have to file a BOI if you don't want to. All right now. What's going to happen next? Now this is still at the Fifth Circuit Court of Appeals. All right, the Fifth Circuit Court of Appeals is expediting this and it's going to go before the regular process. No more emergency motions. That's where these first two orders that went whipsaw back and forth happened. These were like emergency orders and three judge panels were ruling on these. They finally were like no, let this thing be unconstitutional. For now, business owners don't have to file it and let's let this go. And we're going to hear this in an expedited manner. So it's still at the Fifth Circuit. After it's decided the Fifth Circuit, this could be weeks, it could be months. They haven't issued the calendar yet, but they've said they're going to move this in an expedited manner.

Speaker 1:

After the Fifth Circuit decides this, whoever loses is going to appeal to the US Supreme Court, whether that's the plaintiffs the National Federation of Independent Business Owners Shout out to them, by the way, for having an amazing case and prevailing on these for all business owners. But if they lose, they're going to appeal to the US Supreme Court. If the government loses, they'll appeal to the US Supreme Court as well. Now there are other cases going around in other circuits. There was an Alabama case earlier this year, for example, where an Alabama federal district court judge ruled the BOI requirement unconstitutional as well. However, that case was limited to only the plaintiffs in that case. The reason this case that's been gathering all this attention out of Texas matters is because the federal district court judge in Texas said the BOI requirement that a business owner who establishes an LLC or corporation at the state must also go file something to the federal government is unconstitutional on its face. For every plaintiff, everybody, every business owner, it is unconstitutional. And what's called a facial challenge, meaning no matter who this gets applied to, it's unconstitutional. And because the judge ruled in that way, the judge was able to put a nationwide injunction against the Department of Treasury and FinCEN saying you cannot enforce this.

Speaker 1:

Now, remember the judicial branch. If you go back to like you know we had politics. You had to take it in high school, if you remember this in government class. The judicial branch interprets the law and they apply the Constitution to the law and that's the role of federal district court, judges, federal appeals court and, ultimately, the US Supreme Court. Where this goes, congress just gets to write the law. The executive branch enforces it. We've got the judicial branch, the courts, the Fifth Circuit. Right now, who's really got the football deciding what's happening on the BOIs? Okay, so the Fifth Circuit's going to have it for a while. This could go all the way to the Supreme Court. This is the case to watch the Texas case. Don't be distracted by all the other cases right now the Alabama case or other ones. This is the big one and the Fifth Circuit's in control of this. That's going to be deciding because this case has the nationwide injunction. This is the biggest issue at stake All right now.

Speaker 1:

I've had a lot of people ask me well, what if I already filed, matt? I already filed my BOI. Well, don't worry about it. You don't have to pay attention to the seesawing back and forth. That's good for you. You already filed, I filed. I filed for over a dozen entities of my own. We filed thousands for our clients in my law firm at KKOS Lawyers Ripping the shirt here Also our company compliance business, main Street Business Services. We filed thousands for our clients where we do their company maintenance, we do their renewals, and so we filed thousands of these because people needed to do it. Well, in early December, we heard you actually don't have to, and this constitutional challenge became super important. So if you've already filed, don't worry about it, you're done. If you haven't filed, you may decide to go and just watch how this case goes Now.

Speaker 1:

The deadline was moved. It used to be January 1st 2025. It was moved to January 13th 2025. Now to file a BOI, this is if you have an LLC or corporation that was set up before 2024. So you set up an LLC or corporation in 2022. Your deadline had been moved to January 13th 2025. Now that deadline doesn't matter because you can rely on this Fifth Circuit order right now. That is essentially putting the national injunction back in place, which means you don't have to file a BOI for now.

Speaker 1:

Now I've had a lot of people say I'm sick and tired of this back and forth. Matt, I'm just going to file the damn thing and be done with it. I get that there's other people that think this is unconstitutional. I'm going to wait till the last minute of whether I file this thing or not, and I get that too Likely, if the government wins at some point there's going to be some relief, and some time Now.

Speaker 1:

One other thing I wanted to say. This could go to US Supreme Court. There's also a bill pending before Congress right now that would basically pull back the requirement for BOIs. We don't know what a new Trump administration is going to say on this either. Trump initially vetoed the Corporate Transparency Act, which had this BOI requirement. He vetoed it on spending issues, though, because there was some defense spending in there he did not like. So we don't know. Trump hasn't said where he's going to go on this. There's a new Trump administration coming in in January January 20 we're gonna have an inauguration.

Speaker 1:

They may decide not to push this at all, so I want to give you this update. Make sure you subscribe to my channel, though. I'm gonna give you updates on what's going on. I'm gonna see if there's any questions in here that I can grab right now. Where did this law come from? The law came from the corporate. It was about to file tomorrow. Now I'm not good. I'm glad you're paying attention here. You don't have to file, so all right. Well, I'm going to be coming back to any comments on this. Again, make sure you're subscribed. I'll be providing updates later. Thanks for joining me. Want to make sure all of you got this update. Till then, enjoy the rest of the holidays. Enjoy your New Year. We'll see you next time.

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Mark J. Kohler

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