Treasury delays beneficial ownership reporting deadline for small businesses

Author: ASBN Newsroom

The U.S. Treasury Department has extended the deadline for millions of small businesses to file their Beneficial Ownership Information (BOI) reports under the Corporate Transparency Act (CTA). The new deadline is now January 13, 2025. This decision was made in response to legal challenges and concerns regarding businesses’ readiness to comply with the new requirements.

Who Needs to Comply?

The BOI rule impacts an estimated 32.6 million businesses, including many corporations, limited liability companies (LLCs), and other legal entities. However, certain businesses are exempt, including:

• Companies with over $5 million in gross revenue and over 20 full-time employees.
• Large organizations like banks, credit unions, tax-exempt entities, and public utilities already provide information similar to that of federal agencies.

For those required to file, noncompliance could lead to:

• Civil penalties of up to $591 per day, adjusted for inflation.
• Criminal fines of up to $10,000 and possible imprisonment for up to two years.

The reporting requirement applies differently based on the company’s registration date:

• Businesses formed before 2024 have until January 13, 2025, to file.
• Businesses formed on or after January 1, 2025, must file their BOI report within 30 days of formation.

What prompted the delay?

The Treasury’s decision to delay the BOI compliance deadline followed legal challenges to the CTA. A federal court in Texas issued a nationwide injunction temporarily blocking enforcement of the rule, only for the 5th U.S. Circuit Court of Appeals to overturn the injunction. To account for the disruption caused by this legal back-and-forth, the Treasury granted businesses an additional year to comply.

As of early December 2024, only 9.5 million BOI reports had been filed—about 30% of the total expected filings—according to data shared with Rep. French Hill (R-Ark.). Hill, a vocal critic of the CTA, has called for its repeal, citing concerns over business awareness and compliance burdens.

Challenges for Small Businesses

Many small businesses remain unaware of the BOI reporting requirements. Experts suggest that FinCEN (Financial Crimes Enforcement Network) is prioritizing education over enforcement at this stage.

• Daniel Stipano, a partner at Davis Polk & Wardwell, noted that penalties are “unlikely” for businesses acting in good faith or unintentionally failing to comply.
• FinCEN has emphasized that its immediate goal is to raise awareness, not to pursue enforcement actions aggressively.

The BOI reporting requirements aim to enhance transparency and combat financial crimes. However, the challenges and delays surrounding its implementation highlight the importance of educating businesses to ensure compliance. Entrepreneurs should assess their obligations and take advantage of the extended deadline to avoid fines or penalties.

Looking Ahead

While the Treasury’s delay provides temporary relief, the legal and regulatory landscape remains uncertain. Business owners should monitor updates closely and consult legal or financial professionals to ensure they are prepared for the January 2025 deadline.

Legal, Articles