U.S. Treasury Secretary Janet Yellen tours the Financial Crimes Enforcement Network (FinCEN) in Vienna, Virginia, on January 8, 2024.
Valerie Plesch/Bloomberg via Getty Images
The Treasury Department’s next deadline for millions of small businesses to meet new reporting requirements for “beneficial ownership information” has been postponed again following a court order halting enforcement.
The U.S. 5th Circuit Court of Appeals ruled late on Dec. 26 that the BOI reporting requirement would be suspended while the court “considers the parties’ significant substantive arguments” regarding the constitutionality of the Corporate Transparency Act, according to the order. issued an order to stop.
The new deadline, previously set for January 13, is currently unknown.
“While it is unclear how long the injunction will remain in effect, we expect the injunction to remain in effect until at least March, as this case is scheduled for en banc oral argument on March 25, 2025. ,” said partner Daniel Stipano. An attorney with the law firm Davis Polk & Wardwell wrote in an email.
For the time being, companies are not required to submit BOI reports to the Financial Crimes Enforcement Network (FinCEN), which is part of the Treasury Department.
Companies will not be held responsible for the time being
Additionally, companies will not be held liable if they fail to file a BOI report while the order is in effect, FinCEN said on its website Friday.
Businesses and owners who failed to comply with reporting rules could be subject to civil fines of up to $591 per day. He also faces a criminal fine of up to $10,000 and up to two years in prison.
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Data from BOI reports helps the federal government identify those who own or control companies, directly or indirectly, and helps criminals conceal illegal activities conducted through shell companies or opaque ownership structures. The Ministry of Finance said it could prevent this from happening.
According to federal estimates, the rule applies to about 32.6 million businesses, including certain corporations and limited liability companies. Many are exempt from the requirements, including businesses with more than $5 million in gross sales and more than 20 full-time employees.
According to FinCEN, “reporting companies may continue to voluntarily submit beneficiary information reports.”
Whiplash for small businesses
The delay means a bit of legal whiplash for small business owners.
On December 3, a federal court in Texas temporarily blocked the Treasury Department from enforcing the BOI reporting rules, which were then scheduled to go into effect on January 1, 2025.
Then, on December 23, the Fifth Circuit Motion Committee lifted the enforcement injunction following an appeal from the federal government. On December 26, another panel of the same Court of Appeals, the Merits Committee, reinstated the injunction.
“The bottom line is that no one is required to file a BOI report unless the injunction is lifted,” Stipano said in an email.
