21 Attorneys General Sue to Restore BOI Reporting

Twenty-one attorneys general sued Treasury’s FinCEN on Oct. 27 to block the rule that exempts US companies from beneficial ownership reporting.

If you run a store through an LLC, your federal filing duty is zero today, and this lawsuit is the first real attempt to change that. It matters to every Ecommerce Paradise reader who owns a store entity, a holding company, or a second brand, because the paperwork you skipped this year could come back with a deadline attached.

Below: what the states filed, how the exemption happened, what it means for a high-ticket store owner, and five things to do this week. I covered the Supreme Court’s refusal to hear two challenges in my Oct. 5 breakdown. This is the next move in the same fight.

Forming or re-forming the LLC behind your store? Northwest Registered Agent puts its own address on your public filings and forwards your physical mail, which helps when you run the store from another state or another country. Form your LLC with Northwest →

21 Attorneys General Sue FinCEN Over the BOI Rollback

The coalition filed on Tuesday, Oct. 27, 2026, in the US District Court for the District of Oregon, according to The Epoch Times. Oregon Attorney General Dan Rayfield filed it. California’s Rob Bonta and New York’s Letitia James are among the 21 plaintiffs, which are 20 states plus the District of Columbia.

The complaint targets the final rule FinCEN issued on Aug. 11 and published in the Federal Register on Aug. 14, 2026. Per the California Attorney General’s office, the states argue the rule exceeds FinCEN’s statutory authority, is contrary to law, and is arbitrary and capricious. They also allege violations of the Administrative Procedure Act and the Constitution. The Epoch Times reports that the states say Treasury skipped required consultation with the homeland security secretary and the US attorney general before exempting nearly every business.

The rule’s reach is the heart of the case. James’s office says more than 99.9% of the companies that would otherwise have had to report are now exempt, per FingerLakes1. The states also challenge Treasury’s plan to delete ownership data it already collected from newly exempt companies, arguing the department lacks that authority. They want the court to declare the rule unlawful and block it.

New York Attorney General Letitia James said, per American Banker: “Secretive shell companies help drug traffickers, tax cheats, and other criminals hide their illegal profits.” Rayfield said the administration “has given a green light to all sorts of criminals,” according to The Epoch Times.

Advocacy groups back the states. Mark Hays, associate director for cryptocurrency at Americans for Financial Reform, called the rollback “a gift to fraudsters and corrupt actors worldwide,” per The Epoch Times. The suit’s strongest argument is procedural: that Treasury did not follow the steps Congress required before exempting almost every company, and that it acted without a reasonable explanation. Courts tend to take procedural defects seriously, which is why this case is more than a political statement.

Treasury has not responded to the suit in any coverage I found. Bessent’s office did not immediately answer a request for comment, per The Epoch Times. No hearing date or ruling date has been reported.

How FinCEN Exempted 99.9% of US Companies From BOI Reporting

The Corporate Transparency Act passed in 2021 over a presidential veto. It required most small companies to file ownership reports with FinCEN. The original reporting rule covered roughly 32 million domestic and foreign companies, according to law firm Mayer Brown.

On March 21, 2025, FinCEN issued an interim final rule narrowing reporting to “foreign reporting companies,” meaning entities formed under foreign law and registered to do business in a US state. That left roughly 20,000 foreign companies still reporting, per Mayer Brown. Courts had also paused enforcement along the way.

The final rule made it permanent. Mayer Brown’s analysis says that under the rule, “no domestic entity, regardless of size, structure, or ownership, has any obligation to file” initial, updated, or corrected reports. It took effect on publication, Aug. 14. Treasury Secretary Scott Bessent called it a “victory for common sense,” and Treasury said in August it would cut burdens on small businesses, per The Epoch Times.

There is a real counterpoint on the business side. The National Small Business Association, which represents more than 65,000 owners, says compliance cost small businesses nearly $8,000 on average in the first year, and that willful violations carried fines up to $10,000 and up to two years in prison, according to The Epoch Times. That is the NSBA’s figure, not a government audit. The group had asked the Supreme Court to rule on the law’s constitutionality. The Court declined on Oct. 5.

Some obligations survived. Troutman Pepper Locke noted in an Aug. 19 alert that the federal rule does not preempt state ownership laws, and that New York’s LLC Transparency Act, effective Jan. 1, 2026, imposes separate disclosure duties on foreign LLCs registered in New York. Troutman also said FinCEN has not assessed penalties for the stretch when enforcement was suspended, so companies that never filed should not face retroactive liability. And per Mayer Brown, FinCEN “reaffirmed that BOI collection at account opening remains an important AML/CFT control,” so banks still ask who owns the company.

What the BOI Lawsuit Means for Your Ecommerce LLC

My read is that this suit is a long shot on timing and a real risk on direction. Courts have already scrambled this law more than once, and no ruling date exists. But if the states win, the exemption for domestic companies disappears, and every entity you own is back inside the reporting net.

Here is how I’d think about three outcomes. None of them requires you to refile anything today, which is the point: you are preparing, not reacting.

The rule stands. Nothing changes federally. Your work shifts to state filings and to the paperwork banks and processors demand at onboarding. This is the most likely path in the next few months, because lawsuits like this move slowly.

The court blocks or vacates the rule. Reporting for domestic companies could return. Expect FinCEN to set new deadlines, and expect the usual scramble of filing services. If you formed entities in 2024 or 2025 and never filed, you would want clean records ready on day one.

A partial or delayed result. An appeal or a narrow ruling keeps everyone in limbo for a year or more. This is where the records file in the action steps pays for itself.

Here is hypothetical math, not a reported figure. Say you own three entities: the store LLC, a holding company, and a second brand. If reporting came back and each took two hours of your time plus a $150 filing-service fee, that is $450 in fees and six hours. At a $100 value on your hour, the total is about $1,050. Compare that to the NSBA’s $8,000 average, which suggests that owners who kept tidy records would land well under it. Prepared owners pay less. That is the whole argument for acting before a ruling.

Your entity choices matter more than the headlines. A US-formed LLC is exempt today. A foreign-formed company registered in a US state still reports on its non-US owners.

If you are a non-US founder, my guide to forming a US LLC as a non-US founder lays out the structure options. Foreign-owned LLCs also carry separate IRS duties, which I covered in the Form 5472 extension post.

The ownership details you give a bank do not go away either. Opening a Mercury account still means telling the bank who owns the company.

My Mercury application guide shows exactly what they ask. Stores that run on one processor and one bank get hurt when an ownership question stalls an account, so build the backup plan before you need it.

Money is the practical stake here. A frozen account in November costs a store owner far more than any filing fee. High-ticket orders mean big deposits, and big deposits draw attention from risk teams. A clean paper trail on who owns what is the cheapest insurance you can buy, and it costs you an hour.

The reason this matters to a store owner and not just a lawyer is pressure from the other side of the table. Reporting rules decide how much a bank, a processor, or a prospective buyer can ask about your company. When federal reporting disappears, those parties lean harder on their own checks, and you answer them directly. An owner who can hand over a tidy ownership file removes friction from every one of those requests. That edge costs nothing.

Public records are the other angle. Your registered agent address and mailing address are what the world sees, and I’d keep your home address off them.

My breakdown of getting a business address without renting an office compares the options. iPostal1 is one I point people to for digital mail.

If the entity setup, the bank, and the store build all feel like too many moving parts, my turnkey done-for-you service handles the build so you can stay in the business instead of the paperwork.

One more read on timing. Agencies and courts often move slower than owners expect, and a federal judge could take months on a motion like this. I would not rebuild anything today. I would simply make sure that if a deadline appeared on a Monday, you could meet it by Friday. That is the right level of preparation: calm, cheap, and done before the news cycle turns.

Ownership rules are shifting. Make sure your store sits on a clean legal foundation. See how to form your business →

Five BOI Steps to Take Before the Court Rules

This is not legal advice, and I’m not a lawyer or tax advisor. Talk to your attorney or CPA about your entities. Here are five practical moves for this week:

List every entity you own and where it was formed. Note any that were formed outside the US or registered as a foreign company in a state, since those still have federal reporting duties. My guide to forming an LLC for a high-ticket store shows the clean setup.
Build one ownership file per entity: owner names, percentages, formation date, EIN letter, operating agreement, and registered agent details. It takes an hour and covers you whether the rule stands or falls.
Check your state’s own rules at the Secretary of State site. New York’s LLC Transparency Act already applies to foreign LLCs there, and other states have proposals. Skim my dropshipping taxes and legal checklist for the rest of your compliance calendar.
Audit your address and banking. Keep a registered agent and a business mailing address on public filings, and keep a second account for cross-border payments. Wise works well for supplier payments. I compare more choices in my business bank accounts roundup.
Keep your books ready to hand over. If reporting returns, you will need dates and ownership splits that match your accounting. QuickBooks keeps that trail. While you are tidying the business side, grab my free high-ticket niches list too.

Frequently Asked Questions

Do I have to file a BOI report for my US LLC today?
No. Under the final rule effective Aug. 14, 2026, domestic entities have no obligation to file initial, updated, or corrected reports, per Mayer Brown. Foreign-formed companies registered in a US state still do, for their non-US owners.

Could the lawsuit bring reporting back?
It could, if the court blocks or vacates the rule. No ruling date has been reported, and Treasury has not responded publicly. Keep your ownership records current and watch FinCEN’s BOI page.

Will I owe penalties for not filing during the pause?
Troutman Pepper Locke said FinCEN has not assessed penalties for the period when enforcement was suspended, so companies that did not file should not face retroactive liability. Confirm with your attorney.

Do banks still ask who owns my company?
Yes. FinCEN reaffirmed that collecting ownership information at account opening remains an AML control, per Mayer Brown. Read my Mercury pricing breakdown before you choose where the money sits.

Does a foreign-owned LLC still have extra paperwork?
Often, yes, including IRS filings and state rules. See my checklist for running a US store from abroad.

Which formation service should I use?
It depends on privacy, mail handling, and renewal pricing. Compare Bizee and other services on privacy and renewal price before you pay anything.

Where do I compare formation services?
Start with Bizee vs Inc Authority. The LegalZoom alternatives list is a second stop.

Does a restructure raise my chargeback risk?
It can, if a bank or processor freezes funds while it reviews ownership. Fraud and dispute tools like ClearSale help. My chargeback prevention guide in the related list covers the rest.

Paperwork should not eat the hours you need for growth. Want my team to scale the store you already have? See the scaling service →

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Trevor Fenner

Trevor Fenner is an ecommerce entrepreneur and world traveler from Seattle, Washington, and the founder of Ecommerce Paradise, a platform focused on helping entrepreneurs build and scale profitable high-ticket ecommerce and dropshipping businesses. With over a decade of hands-on experience, Trevor specializes in high-ticket dropshipping strategy, niche and product selection, supplier recruiting and onboarding, Google & Bing Shopping ads, ecommerce SEO, and systems-driven automation and scaling. Through Ecommerce Paradise, he provides free education via in-depth guides like How to Start High-Ticket Dropshipping, advanced training through the High-Ticket Dropshipping Masterclass, and fully done-for-you turnkey ecommerce services for entrepreneurs who want a faster, more hands-off path to growth. Trevor is known for emphasizing sustainable, real-world ecommerce models over hype-driven tactics, helping store owners build scalable, sellable, and location-independent brands.

He maintains homes in Seattle and Bali, spends most of the year overseas, and usually returns to Seattle for about a month each summer.

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