As of the start of 2024, small companies meeting certain qualifications were required to file beneficial ownership information reports (BOI) with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). This requirement came as part of the 2021 Corporate Transparency Act.
However, there have been twists and turns to it in the last few weeks. Originally, the deadline to file the BOI report was January 1, 2025. Earlier this week, that deadline was extended to January 13, 2025, following some litigation that may have slowed people down in their filings. Now, though, as of December 26, the requirement is on hold again as a result of a court decision.
Some 32.6 million small businesses would qualify to have to submit this form, according to the government. That includes corporations as well as LLCs, and it is for those companies created or registered before January 1, 2024. Those that register after January 1, 2024, would have 90 days to file it, and those that register after January 1, 2025, would have 30 days to file it.
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What’s going on with the BOI report deadline?
The National Federation of Independent Business has been fighting the BOI reporting requirement, calling it burdensome and an overreach. With several groups, the lawsuit Texas Top Cop Shop Inc. et al v. Garland et al has been ongoing.
In early December, a preliminary injunction was issued, stopping the requirement to submit a BOI report. But earlier this week, December 23, the 5th Circuit Court of Appeals overturned that. So for a few days, FinCEN was requiring it, with an extended deadline of January 13 to give companies a little more time.
However, on December 26, a different panel of the 5th Circuit vacated the December 23 order. In other words, the preliminary injunction is back in place and BOI reports are not currently required.
FinCEN confirms this on its website: “Accordingly, as of December 26, 2024, the injunction issued by the district court in Texas Top Cop Shop, Inc. v. Garland is in effect and reporting companies are not currently required to file beneficial ownership information with FinCEN.”
It’s highly possible this will change again. The December 26 5th Circuit order states the preliminary injunction is held in place “in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments.” In other words, this panel is looking at the case, and nothing is a done deal yet.
Do you have to file a BOI report?
If you have an LLC or otherwise a small, registered business, chances are, you have to fill out this form if the injunction is lifted and it’s allowed to be required.
The rule would apply to small businesses — companies with more than 20 full-time employees or that have made over $5 million in gross receipts or sales over the previous year do not have to file this form. There are other exceptions, which you can find listed out from FinCEN here.
FinCEN’s basic flowchart says that if the company is a corporation, limited liability company, or if it was “created by the filing of a document with a secretary of state or any similar office,” there is a chance it qualifies as a “reporting company” and will have to submit a BOI report, unless it has another exemption.
If you’re not totally sure if your company qualifies, you should check with your CPA or another financial professional you work with.
What happens if you don’t submit a BOI report?
If the injunction is lifted, your company is required to submit a BOI report and you don’t by the deadline, you could face a hefty fine.
That could include civil penalties up to $500 daily for each day you don’t file, a fine of up to $10,000, or even imprisonment for up to two years. So, you should be sure to check if you have to submit this report.
How do you submit a BOI report?
While reporting is currently not required, as a result of the ongoing litigation, “companies may continue to voluntarily submit beneficial ownership information reports,” per FinCEN.
To submit a BOI report, you just need to go to the FinCEN BOI site. Filing is free, and you can do it directly through the website. You’ll need basic information including the tax identification information and information for the beneficial owner.
A “beneficial owner,” per FinCEN, is “an individual who either directly or indirectly: (1) exercises substantial control over the reporting company, or (2) owns or controls at least 25% of the reporting company’s ownership interests.” This has to be an individual, not a trust, corporation or other legal entity.
It only takes a few minutes to fill out the report.
Why do you need to submit a BOI report?
The intent of these reports is to help eliminate corruption and crimes. I’ll let Treasury Secretary Janet Yellen take it away from here with her explanation:
“Corporate anonymity enables money laundering, drug trafficking, terrorism, and corruption. It harms American citizens and puts law-abiding small businesses at a disadvantage. Having a centralized database of beneficial ownership information will eliminate critical vulnerabilities in our financial system and allow us to tackle the scourge of illicit finance enabled by opaque corporate structures.”
We’ll standby for now to see what happens next with this requirement.
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