As the Treasury Department gears up to enforce new regulations, businesses have been given a reprieve until March 21, allowing them more time to meet a new reporting obligation about “beneficial ownership information.” This extension follows a court ruling lifting a previous injunction, thereby allowing the Treasury to implement the Corporate Transparency Act, first passed by Congress in 2021. This law requires small businesses to reveal the identities of individuals who have direct or indirect control over the company, aiming to crack down on criminal activities often hidden under the guise of shell companies or unclear ownership structures.
Navigating the fluctuating deadlines for submitting Beneficial Ownership Information (BOI) reports has been a challenging experience for businesses. A series of court decisions initially halted the enforcement of this requirement, but those rulings were eventually overturned. Most recently, the U.S. District Court for the Eastern District of Texas removed a nationwide block that had stopped FinCEN, part of the Treasury, from enforcing the law.
This requirement impacts around 32.6 million businesses, including certain types of corporations and limited liability companies, according to federal estimates. Non-compliance can lead to significant consequences, such as civil fines reaching up to $591 daily, adjusted for inflation, and potential criminal fines up to $10,000, along with the possibility of spending up to two years in prison.
Despite extending the deadline by another 30 days, FinCEN has left the door open for more postponements down the line. A notice from February 18 indicated that, while companies have been granted additional time, FinCEN plans to prioritize those businesses that pose substantial national security threats. Companies should stay tuned for further updates that may affect their BOI reporting responsibilities.
