After a series of twists and turns, small companies meeting certain qualifications are once again asked to file beneficial ownership information reports (BOI) with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) as part of the 2021 Corporate Transparency Act. However, FinCEN announced it will not be issuing fines or penalties for companies that fail to report.
Originally, the requirement went into effect in 2024, with deadline to file the BOI report of January 1, 2025. In late December, that deadline was extended to January 13, following some litigation that may have slowed people down in their filings. Then on December 26, the requirement was put on hold as a result of a court decision. The Supreme Court made a related ruling on January 23, but it wasn't enough to force the requirement into action.
However, a U.S. District Court decision on February 18 did kick the requirement back in action, and FinCEN set a deadline of March 21 to file the BOI report. But the rollercoaster continued when FinCEN announced it won't be enforcing the deadline.
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Some 32.6 million small businesses would qualify to have to submit this form, according to the government. That includes corporations as well as LLCs, and it is for those companies created or registered before January 1, 2024. Those that register after January 1, 2024, would have 90 days to file it, and those that register after January 1, 2025, would have 30 days to file it.
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 in the lawsuit Texas Top Cop Shop Inc. et al v. Garland et al. 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 overturned that. 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, it put the preliminary injunction back in place and BOI reports were again not required.
Then, on January 23, the Supreme Court issued a ruling allowing enforcement of the Corporate Transparency Act. However, that ruling didn't address a different national injunction that was part of another case, Smith v. U.S. Department of the Treasury. So, BOI reporting was still not required.
In February, a judge in the U.S. District Court for the Eastern District of Texas, as part of the Smith case, issued an order staying the remaining national injunction. As such, BOI reporting went back in effect.
However, FinCEN announced at the end of February that "it will not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update beneficial ownership information (BOI) reports pursuant to the Corporate Transparency Act by the current deadlines."
It's likely all this will change again, whether through the next action in the courts or through a decision by the administration of President Donald Trump or other lawmakers. In January, Republicans in Congress reintroduced a bill to repeal the Corporate Transparency Act, calling it "a big government overreach."
And Trump himself is not a fan of the requirement. Over the weekend, he celebrated FinCEN's announcement of no fines or penalties, calling the BOI reporting requirement "outrageous and invasive" on TruthSocial.
So, what is the BOI report deadline?
The deadline itself is somewhat in limbo, given that FinCEN is not enforcing failure to meet it.
However, on February 18, FinCEN provided a deadline of March 21 for most reporting companies. Some companies, though, had an extension to April because of disaster relief extensions.
Who is supposed to file a BOI report?
If you have an LLC or otherwise a small, registered business, chances are, you would have to fill out this form.
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?
The original requirement included possibly heft fines for failing to submit a report by the deadline. That included civil penalties up to $500 daily for each day you don't file, a fine of $10,000, or even imprisonment for up to two years.
However, as of February 27, FinCEN said: "No fines or penalties will be issued, and no enforcement actions will be taken, until a forthcoming interim final rule becomes effective and the new relevant due dates in the interim final rule have passed."
How do you submit a BOI report?
To submit a BOI report, you would just need to go to the FinCEN BOI site. Filing is free, and you can do it directly through the website. You'd 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.
Avoid mistakes in your BOI filing
It only takes a few minutes to fill out the report, but you would want to make sure to avoid mistakes, attorney John L. Williams emphasized in comments to Kiplinger. You could work with a lawyer or CPA to help accurately submit the BOI report.
"I would suggest that at least two people be involved in any filings," Williams said. "It is just too easy to make rookie mistakes."
These are some common missteps Williams says he's seen:
- Name mismatch, including only using a middle initial or leaving middle names out entirely
- Getting addresses wrong, including basic typos
- Inputting the wrong company applicants
- Errors in business names, not listing DBAs; spelling company names wrong and/or leaving out punctuation
The BOI form requires uploading an image of an identifying document, like a passport or driver's license. Williams says some people are struggling to get that image right, either because of technical issues or not understanding it should be an image of the identifying document.
After you finish the submission, you should download the transcript. That keeps a record of what was submitted.
While you can work with a professional to help submit the BOI report, make sure it's a trusted professional. There have been warnings about scams regarding third-party platforms claiming to help with filings.
What was the intent of BOI reports?
The intent of these reports was to 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."
We'll standby for now to see what happens next with this requirement.
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