The Ministry of Finance is delaying the deadline for small companies to submit a brand new BOI type
Janet Yellen, US Secretary of the Treasury, tours the Financial Crimes Enforcement Network (FinCEN) in Vienna, Virginia, on January 8, 2024.
Valerie Plesch/Bloomberg via Getty Images
The U.S. Treasury Department has pushed back to Jan. 13, 2025, the deadline for millions of small businesses to file a new form known as a Beneficial Ownership Information Report.
The Treasury Department initially required many companies to file the report with the agency's Financial Crimes Enforcement Network, known as FinCEN, by Jan. 1. Failure to comply can result in fines exceeding $10,000.
This delay is due to legal challenges to the new reporting requirement under the Corporate Transparency Act.
According to federal estimates, the rule applies to approximately 32.6 million companies, including certain corporations, limited liability companies and others.
Businesses and owners who fail to comply may face civil penalties of up to $591 per day, adjusted for inflation, according to FinCEN. You also face fines of up to $10,000 and up to two years in prison.
However, many small businesses are exempt. For example, companies with gross sales over $5 million and more than 20 full-time employees may not be required to file a report.
Why Treasury Delayed BOI Reporting Requirement
The Treasury Department has postponed the compliance deadline due to a recent court ruling.
A federal court in Texas issued a nationwide injunction on December 3 that temporarily blocked FinCEN from enforcing the rule. However, the 5th U.S. Circuit Court of Appeals lifted that injunction on Monday.
“Because Treasury recognizes that reporting entities may need additional time to become compliant given the length of time the injunction was in effect, we have extended the reporting deadline,” the FinCEN website says.
FinCEN did not return a request from CNBC for comment on the number of companies that have filed a BOI report so far.
However, some data suggests that few have done so.
The federal government had received about 9.5 million applications as of Dec. 1, according to statistics FinCEN provided to the office of Rep. French Hill, R-Ark. This figure represents approximately 30% of the estimated total.
Hill has called for the repeal of the Corporate Transparency Act passed in 2021, which established the BOI requirement. Hill's office provided the data to CNBC.
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“Most non-exempt reporting companies have not filed their initial reports, presumably because they are unaware of the requirement,” Daniel Stipano, a partner at law firm Davis Polk & Wardwell, wrote in an email.
There is a potential silver lining for companies: It is “unlikely” that FinCEN would impose financial penalties “except in cases of bad faith or willful violations,” Stipano said.
“In its public statements, FinCEN has made clear that its primary goal at this time is to educate the public about the requirement, not to take enforcement action against non-compliant entities,” he said.
Certain companies are exempt from BOI filing
BOI submission is not an annual requirement. Companies simply need to resubmit the form to update or correct information.
Many tax-exempt entities—such as large corporations, banks, credit unions, tax-exempt corporations, and public utilities—already provide similar data.
Different compliance deadlines apply to companies depending on when they were founded.
For example, according to FinCEN, those incorporated or registered before 2024 have until January 13, 2025 to file their first BOI reports. Those doing so on or after January 1, 2025 will have 30 days to file a report.
There will likely be other court rulings that could impact coverage, Stipano said.
On the one hand, there is currently a legal dispute in the 5th District, which has not yet officially decided on the constitutionality of the Corporate Transparency Act.
“Court challenges to the law have been filed in multiple jurisdictions, and these lawsuits could eventually reach the Supreme Court,” he wrote. “It is unclear at this time whether the incoming Trump administration will continue to support the administration’s position in these cases.”
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