The U.S. Treasury Department has extended the deadline for small businesses to file the Beneficial Ownership Information (BOI) report under the Corporate Transparency Act (CTA). Businesses now have until Jan. 13, 2025, to comply with the new rule, which was originally due on Jan. 1, 2025.
Key Details of the BOI Reporting Rule
The BOI reporting requirement, managed by the Treasury’s Financial Crimes Enforcement Network (FinCEN), affects approximately 32.6 million businesses, including certain corporations and limited liability companies.
- Penalties for Noncompliance: Businesses failing to comply face civil penalties of $591 per day (adjusted for inflation) and criminal fines of up to $10,000, along with potential imprisonment of up to two years.
- Exemptions: Businesses with more than $5 million in gross sales and 20 full-time employees, as well as banks, credit unions, and other large entities, may not need to file.
Why the Deadline Was Extended
The extension follows a Dec. 3 federal court ruling in Texas that issued a preliminary injunction blocking FinCEN from enforcing the rule. Although the 5th U.S. Circuit Court of Appeals reversed the injunction, the delay acknowledges that businesses may need additional time to comply due to the injunction’s temporary effect.
“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,” stated FinCEN on its website.
Low Compliance Rates
Data from FinCEN suggests many businesses remain unaware of the requirement. As of Dec. 1, 2024, only 9.5 million filings—approximately 30% of the estimated total—had been submitted.
“Most non-exempt reporting companies have not filed their initial reports, presumably because they are unaware of the requirement,” wrote Daniel Stipano, a partner at Davis Polk & Wardwell, in an email.
Treasury’s Focus on Education Over Enforcement
FinCEN has indicated that its primary goal is to educate the public about the new rule, rather than immediately imposing penalties. “It’s unlikely FinCEN would impose financial penalties except in cases of bad faith or intentional violations,” added Stipano.
Compliance Requirements
The BOI report is not an annual filing but must be updated or corrected as necessary. Deadlines vary based on a business’s formation date:
- Pre-2024 Formations: Must file by Jan. 13, 2025.
- Post-Jan. 1, 2025, Formations: Must file within 30 days of creation or registration.
Legal Challenges Continue
Litigation surrounding the Corporate Transparency Act remains unresolved. Cases in the 5th Circuit Court of Appeals and other jurisdictions question the law’s constitutionality, with the possibility of reaching the Supreme Court.
The incoming Trump administration could alter the government’s stance on the CTA, adding further uncertainty to the future of BOI reporting.
