BOI Report Deadline for Small Businesses Halted — Again
By Alexandra Svokos (Kiplinger Personal Finance Magazine)
December 27, 2024
As of the start of 2024, small companies meeting certain qualifications were required to file beneficial ownership information reports (BOI) with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). This requirement came as part of the 2021 Corporate Transparency Act. Some 32.6 million small businesses would be required to file the BOI reports according to the Treasury Department. This includes corporations as well as LLCs, created or registered before January 1, 2024. Those that register after January 1, 2024, would have 90 days to file the report, and those that register after January 1, 2025, would have 30 days within which to file.
However, there have been several recent important and impactful developments in the BOI filing requirement. First, on December 4, 2024, a preliminary injunction was issued temporarily halting the BOI filing requirement. Second, on December 23, a panel of the 5th Circuit Court of Appeals lifted the injunction and reinstated the BOI filing requirement. Accordingly, to allow people time to file the reports in light of the Court decision, FinCEN extended the deadline to January 13, 2025. Now, as of December 26, 2024, the BOI filing requirement is on hold again, as a second panel of judges of the 5th Circuit Court of Appeals has disagreed with the previous panel and has at least temporarily reinstated the December 4 preliminary injunction. Consequently, as of December 26, the BOI report filing requirement is again on hold.
What's going on with the BOI report deadline?
The National Federation of Independent Business has been fighting the BOI reporting requirement, calling it burdensome and an overreach. With several groups, the lawsuit Texas Top Cop Shop Inc. et al v. Garland et al has been ongoing. In early December 2024, a preliminary injunction was issued, stopping the requirement to submit a BOI report. But on December 23, the 5th Circuit Court of Appeals lifted the injunction. So, for a few days, FinCEN was requiring it, with an extended deadline of January 13 to give companies a little more time. However, on December 26, a different panel of the 5th Circuit vacated the December 23 order. In other words, the preliminary injunction is back in place and BOI reports are not currently required.
FinCEN confirms this on its website: "Accordingly, as of December 26, 2024, the injunction issued by the district court in Texas Top Cop Shop, Inc. v. Garland is in effect and reporting companies are not currently required to file beneficial ownership information with FinCEN."
It's highly possible this will change again. The December 26 5th Circuit order states the preliminary injunction is held in place "in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments." In other words, this panel is looking at the case, and nothing is a done deal yet.
Do you have to file a BOI report?
If you have an LLC or otherwise a small, registered business, chances are, you have to complete and submit the BOI report if the injunction is again lifted, and the 5th Circuit allows the BOI report filing to be required.
The rule would apply to small businesses — companies with more than 20 full-time employees or that have made over $5 million in gross receipts or sales over the previous year do not have to file this form. There are other exceptions, which you can find listed out from FinCEN here.
FinCEN's basic flowchart says that if the company is a corporation, limited liability company, or if it was "created by the filing of a document with a secretary of state or any similar office," there is a chance it qualifies as a "reporting company" and will have to submit a BOI report, unless it has another exemption. If you're not totally sure if your company qualifies, you should check with your CPA or another financial professional you work with.
What happens if you don't submit a BOI report?
If the injunction is lifted, your company is required to submit a BOI report and you don't by the deadline, you could face a hefty fine. That could include civil penalties up to $500 daily for each day you don't file, a fine of up to $10,000, or even imprisonment for up to two years. So, you should be sure to check if you have to submit this report.
How do you submit a BOI report?
While reporting is currently not required, as a result of the ongoing litigation, "companies may continue to voluntarily submit beneficial ownership information reports," per FinCEN.
To submit a BOI report, you just need to go to the FinCEN BOI site. Filing is free, and you can do it directly through the website. You'll need basic information including the tax identification information and information for the beneficial owner. A "beneficial owner," per FinCEN, is "an individual who either directly or indirectly: (1) exercises substantial control over the reporting company, or (2) owns or controls at least 25% of the reporting company’s ownership interests." This has to be an individual, not a trust, corporation or other legal entity.
Why would you need to submit a BOI report?
The intent of these reports is stated to be tp help eliminate corruption and crimes. I'll let Treasury Secretary Janet Yellen take it away from here with her explanation:
"Corporate anonymity enables money laundering, drug trafficking, terrorism, and corruption. It harms American citizens and puts law-abiding small businesses at a disadvantage. Having a centralized database of beneficial ownership information will eliminate critical vulnerabilities in our financial system and allow us to tackle the scourge of illicit finance enabled by opaque corporate structures."
Standby for more information regarding BOI report filing requirements.
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