Columbus, Ohio – The U.S. Treasury Department has recently announced a significant extension for millions of small businesses across the country. The new deadline to file the Beneficial Ownership Information (BOI) report is now set for January 13, 2025. This extension comes amid legal disputes and challenges concerning the Corporate Transparency Act requirements.
Originally, businesses were to submit their reports to the Financial Crimes Enforcement Network (FinCEN) by January 1. However, potential penalties for non-compliance—ranging up to $10,000 and including possible prison time—have prompted a reevaluation of the timeline.
Legal Challenges and Compliance Concerns
The deadline extension follows a tumultuous series of legal events. A Texas federal court had initially halted the enforcement of these rules with a nationwide preliminary injunction on December 3. However, this decision was overturned shortly afterward by the 5th U.S. Circuit Court of Appeals. Despite the reversal, the temporary suspension led to significant uncertainties among businesses about their obligations under the new law.
The Treasury acknowledged these difficulties, according to the FinCEN website, “Because the Department of the Treasury recognizes that reporting companies may need additional time to comply given the period when the preliminary injunction had been in effect, we have extended the reporting deadline.”
Who Needs to Comply?
The reporting requirements target a broad swath of the business landscape, affecting an estimated 32.6 million entities, including certain corporations, limited liability companies, and similar entities. As per FinCEN, businesses and owners who fail to comply could face civil penalties of up to $591 a day, adjusted for inflation, in addition to the hefty fines and criminal charges previously mentioned.
Notably, not all businesses are burdened by this requirement. Entities such as those with over $5 million in gross sales and more than 20 full-time employees are exempt. Also, large companies, banks, credit unions, tax-exempt organizations, and public utilities, which typically already report similar information, are not required to submit a BOI report.
Reporting and Compliance Details
The BOI filing is not an annual obligation but must be updated or corrected through re-submission of the form as needed. The deadlines for compliance vary depending on when a business was established. Entities formed or registered before 2024 now have until January 13, 2025, to file their initial reports. Those established on or after January 1, 2025, must file within 30 days.
As of early December, only about 30% of the estimated total businesses had submitted their filings, with around 9.5 million reports received.
This extended deadline provides a crucial cushion for businesses to understand and comply with the requirements, ensuring they can continue their operations without the immediate threat of severe penalties. It represents a critical juncture in the ongoing balance between regulatory requirements and business operations.
