The U.S. Treasury Department has extended the deadline for millions of small businesses to submit a new form, the Beneficial Ownership Information report, to January 13, 2025. Initially, businesses were required to file this report with the Financial Crimes Enforcement Network (FinCEN) by January 1, with potential fines exceeding $10,000 for noncompliance. This extension is a response to legal challenges against the Corporate Transparency Act’s new reporting requirement.
The rule affects approximately 32.6 million businesses, including specific corporations, limited liability companies, and others. Failure to comply could result in civil penalties of up to $591 per day, adjusted for inflation, and criminal fines of up to $10,000, along with a maximum of two years in prison. However, certain small businesses are exempt, such as those with over $5 million in gross sales and more than 20 full-time employees.
The Treasury postponed the compliance deadline due to a recent court decision. A federal court in Texas issued a preliminary injunction on December 3, temporarily halting FinCEN from enforcing the rule. However, the 5th U.S. Circuit Court of Appeals overturned this injunction on Monday. The extension was granted to allow reporting companies more time to comply following the period of the preliminary injunction.
According to data provided by FinCEN to Rep. French Hill’s office, only about 30% of the estimated total filings had been received by the federal government as of December 1. Hill has advocated for the repeal of the Corporate Transparency Act, which introduced the BOI requirement. Businesses have varying compliance deadlines based on their formation date, with businesses formed before 2024 having until January 13, 2025, to submit their initial BOI reports.
There may be further legal developments affecting reporting requirements, as ongoing litigation in the 5th Circuit has yet to determine the constitutionality of the Corporate Transparency Act. The possibility of these cases reaching the Supreme Court remains uncertain, particularly regarding the stance of the incoming administration on these matters.
