The U.S. Treasury Department has extended the deadline for millions of small businesses to file the Beneficial Ownership Information (BOI) report to January 13, 2025. This new requirement, part of the Corporate Transparency Act, was initially set for January 1, 2024, and carries potential fines exceeding $10,000 for noncompliance.
What is the BOI Reporting Requirement?
The BOI report requires certain corporations, LLCs, and other entities to disclose ownership details to the Financial Crimes Enforcement Network (FinCEN).
The rule aims to enhance transparency and combat financial crimes. However, businesses with over $5 million in gross sales and more than 20 full-time employees are exempt from this filing.
Why Was the Deadline Extended?
The delay follows a series of legal challenges. A federal court issued an injunction blocking FinCEN from enforcing the rule, which was later overturned by the 5th U.S. Circuit Court of Appeals. Acknowledging the confusion caused by the legal proceedings, FinCEN extended the deadline to allow more time for compliance.
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Consequences of Noncompliance
Businesses failing to file the BOI report could face civil penalties of $591 per day and up to $10,000 in criminal fines, along with potential imprisonment for up to two years. However, FinCEN has indicated its focus is currently on educating businesses rather than imposing penalties, except in cases of bad faith.
Low Filing Rates and Exemptions
As of December 1, only about 30% of the 32.6 million affected businesses had submitted their BOI reports. Many larger entities, including banks, credit unions, and public utilities, are exempt as they already provide similar data through other channels.
Key Compliance Deadlines
- Businesses formed before 2024: Must file by January 13, 2025.
- Businesses formed on or after January 1, 2025: Must file within 30 days of registration.
Legal Challenges and Future Uncertainty
Litigation surrounding the Corporate Transparency Act continues, with potential for further court rulings to impact compliance requirements. Cases challenging the law’s constitutionality may eventually reach the Supreme Court, leaving the future of the BOI filing requirement uncertain.
