Treasury delays beneficial ownership reporting deadline for small businesses

The Treasury Department’s upcoming deadline for millions of small businesses to meet new reporting requirements for “useful proprietary information” has been postponed again, following a court order suspending implementation.

The 5th U.S. Circuit Court of Appeals issued an order late on Dec. 26 that stayed enforcement while the court considers the parties’ “weighty substantive arguments” about the constitutionality of the Corporate Transparency Act, which created the reporting requirements for the Board of Inquiry, the order said. .

The new deadline, which was January 13, is now unclear.

“While it is not known how long the injunction will remain in effect, the case has been scheduled for oral argument On bank “On March 25, 2025, we expect the injunction to be in place until at least March,” Daniel Stepano, a partner at the law firm Davis Polk & Wardwell, wrote in an email.

Meanwhile, companies are not required to file Board of Inquiry reports with the Financial Crimes Enforcement Network, known as FinCEN, which is part of the Treasury Department.

In addition, companies are not subject to liability if they do not file BOI reports while the order is in effect, FinCEN wrote Friday on its website.

Businesses and owners who do not comply with the reporting rules could potentially be subject to civil penalties of up to $591 per day. They may also face criminal fines of up to $10,000 and imprisonment of up to two years.

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The Treasury Department said the Board of Inquiry report data helps the federal government identify people who directly or indirectly own or control a company, to prevent criminals from concealing illicit activities conducted through shell companies or opaque ownership structures.

The rule applies to about 32.6 million businesses, including certain corporations, limited liability companies and others, according to federal estimates. Many are exempt from this requirement, such as businesses with more than $5 million in gross sales and more than 20 full-time employees.

“Reporting companies may continue to voluntarily submit beneficial ownership information reports,” according to FinCEN.

The delay represents a bit of a legal hit for small business owners.

On December 3, a federal court in Texas temporarily blocked the Treasury Department from enforcing the BOI reporting rules, which were then scheduled to take effect on January 1, 2025.

Then, on December 23, the Fifth Circuit Motions Committee lifted that enforcement order after an appeal from the federal government. On December 26, a different panel of the same Court of Appeal – the Merits Commission – reinstated the injunction.

“The bottom line is that no one needs to report to the Board of Inquiry — unless the injunction is lifted,” Stepano explained in an email.