Millions of small businesses have yet to submit a Report of Beneficial Ownership Information (BOI), a document that identifies who owns a business by providing personal information such as names, addresses and dates of birth, is due in a few weeks—or is it?
That's what business owners want to know as the legality of the report continues to make its way through the courts.
BOI reporting is required as part of Corporate Transparency Act (CTA), which entered into force in January 2024, but its legality is still being worked out. And this week has been a game of ping pong.
On Monday, the U.S. Court of Appeals for the Fifth Circuit allowed the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) to enforce the BOI's reporting after a judge for the U.S. District Court for the District East Texas blocked FinCEN from enforcing it earlier this month. .
The decision made the Treasury Department to postpone the submission deadline a BOI report from January 1 to January 13.
However, on Thursday, the court reverse course and blocked the BOI's reporting requests while it looked deeper into the matter.
So can business owners who haven't filed yet breathe a sigh of relief or should they stick to the January 13 deadline?
As of Dec. 1, the federal government had received only 9.5 million BOI files, or about 30% of the expected 32.6 million total. for CNBC. If the current deadline applies, failure to file a BOI report could cost small businesses up to $591 a day, up to $10,000 in fines and up to two years in prison.
Related: This under-the-radar new regulation will affect most businesses. Here's what you need to know.
“Since being told earlier this week that they must urgently file their BOI reports, our nation's small businesses have experienced great chaos and confusion,” said Rob Smith, senior attorney for the Small Business Law Center. of the National Federation of Independent Business. in a press release. “Thankfully, the court's recent decision recognizes that the CTA and BOI's reporting requirements present serious constitutional questions.”
Is a BOI report still required?
On Friday, the US Court of Appeals for the Fifth Circuit barred the federal government from enforcing the BOI's reporting requirements.
The BOI report is not currently required as the case works its way through the courts.
Who will be required to submit a BOI report?
If the court allows enforcement of BOI reports in the future, some entities will be required to file.
Corporations, limited liability companies (LLCs) or entities that are incorporated in the US by filing a document with a secretary of state or similar office will be required to file. Foreign-based companies registered to do business in the US will also be required to file.
Related: Not filing this new mandatory report could cost your business $500 a day
What is required in a BOI report?
The BOI report details who directly or indirectly owns a company making company ownership structures more transparent. It aims to prevent crimes such as money laundering and fraud by clarifying who owns the company.
To fill one out, companies must provide their legal name, any trade name, principal business address, jurisdiction of formation or registration and taxpayer ID number. They also have to offer details of each beneficial ownerincluding full legal name, date of birth, residential address and unique identifier from a government ID.
All BOI reports are filed through FinCEN and have no fee to submit. FinCEN offers a demo less than 5 minutes walking the report submission mode.
Mark J. Kohler, who provides tax and legal advice to small business owners, said in a Video on Instagram posted earlier this week that “none of this is hard to do yourself.”