94% of U.S. business owners at risk of fines from the Financial Crimes Enforcement Network

Small businesses across Greeley and the U.S. may soon face massive fines from the federal government as the deadline for a new report looms. Business owners who don’t meet the deadline could face a fine of nearly $600 per day or even imprisonment of up to two years.

At the start of 2024, the Corporate Transparency Act required all businesses to file a beneficial ownership information report, also known as a BOI. Businesses have until Jan. 1, 2025, and with the deadline only a few months away, it is estimated that 94% of businesses across the nation have yet to file.

“Most of us have never heard of it,” said Linda Winter, owner of Accessories with a Flair and Hair in Greeley. “Otherwise, we would’ve brought it up at our merchant’s meeting. …

“Most of us are small businesses. None of us would be able to bear that fine.”

Business owners who fail to file the report by the deadline will be subject to a fine of $591 per day or even imprisonment for two years and a $10,000 fine. This would put many small businesses in a difficult financial situation as many couldn’t bear the cost of a nearly $600-a-day fine, not even to mention imprisonment.

“Being out $600 a day would put us in a bind,” said Teri Segelke, owner of J&T Feeds in Greeley. “You would think that the government would’ve let us know or sent a message to businesses.”

With an encroaching deadline and only 6% of business owners having filed the report, U.S. Rep. Yadira Caraveo, a Democrat representing Colorado’s 8th Congressional District, and Rep. Zach Nunn, a Republican from Iowa, have introduced a bill that will extend this deadline an additional year.

Congress passed the act to help the Financial Crimes Enforcement Network of the U.S. Treasury prevent tax fraud, money laundering and the financing of terrorism. The report will help accomplish this by requiring business owners, or qualified personnel, to share information about the business structure with the Financial Crimes Enforcement Network.

The report includes where the business is located, how much revenue it’s bringing in, the business’ tax identification number and the identification of individuals who hold significant control in the company, including at least 25% of the business’ ownership interest.

All businesses that have been created and registered with the Secretary of State earlier than Jan. 1, 2024, need to file a BOI report before Jan. 1, 2025. Registered businesses that are created in 2024 need to file the report within 90 days of registering with the Secretary of State, and registered businesses created after Jan. 1, 2025, will only have 30 days.

If a business, no matter the size, has been legally created by registering with the Secretary of State, they need to file a BOI report.

“Throughout the Front Range and Northern Colorado, there is widespread concern amongst our small business owners regarding the quickly approaching deadline to submit beneficial ownership reporting requirements for their businesses,” Caraveo said.

There are limited exceptions to the act. The Federal Crimes Enforcement Networks website lists 23 types of businesses that are exempt, such as tax-exempt businesses, governmental authorities and banks. Businesses that have closed down completely before 2024 are also exempt from filing.

With those exceptions in mind, the U.S. Treasury estimates that a total of 32.6 million businesses across the country will need to file, and as of August, only 2 million have.

The Financial Crimes Enforcement Network was responsible for spreading awareness about the act and its requirements, but with a low social media following, the message wasn’t getting out. Concern has also been raised regarding rural business owners who may not speak English and have no means to become aware of this requirement.

“Our small businesses need our support, and we must act now,” Caraveo said.

To file the report, go to the Financial Crimes Enforcement Network BOI e-file website at boiefiling.fincen.gov. The website also includes information about which businesses are exempt.

Originally Published: August 17, 2024 at 5:57 p.m.