Treasury Extends Deadline for Small Business BOI Reporting Amid Legal Challenges
The U.S. Treasury Department has announced a delay in the deadline for small businesses to file the new Beneficial Ownership Information (BOI) report, extending it from January 1, 2025, to January 13, 2025. This form, mandated under the Corporate Transparency Act (CTA), is intended to enhance transparency and combat illicit financial activities. However, the move comes amid ongoing legal disputes and confusion among businesses about compliance requirements.
Initially, the BOI report was to be submitted to the Financial Crimes Enforcement Network (FinCEN). Noncompliance could lead to fines exceeding $10,000 or civil penalties of $591 per day, adjusted for inflation. Despite these high stakes, federal data indicates that only about 30% of affected businesses have filed their reports to date, raising concerns about awareness and preparedness among business owners.
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The extension follows a series of court rulings that have created uncertainty around the enforcement of the BOI reporting requirements. Most recently, a federal court in Texas issued a nationwide preliminary injunction temporarily halting enforcement of the CTA. This decision was overturned by the Fifth Circuit Court of Appeals, which reinstated the requirement. However, just days later, the same appellate court vacated its order, effectively restoring the injunction and further delaying enforcement.
The CTA, enacted in 2021, applies to approximately 32.6 million businesses, including corporations and limited liability companies, though many small businesses are exempt. For instance, businesses with more than $5 million in gross sales and over 20 full-time employees are not required to file. FinCEN has emphasized that its immediate focus is educating businesses about compliance rather than penalizing them, especially in cases of unintentional noncompliance.
Legal and procedural uncertainties continue to cloud the CTA’s implementation. Ongoing litigation and appeals across multiple jurisdictions may further influence the timeline and scope of enforcement. FinCEN has assured affected businesses that any additional rulings will be communicated promptly, providing them with adequate time to adapt.
While this delay offers temporary relief, businesses are encouraged to remain vigilant and prepare for compliance. As these legal battles unfold, many experts are urging Congress and the courts to clarify the law and address the confusion surrounding these significant reporting requirements.
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