Treasury delays deadline for small businesses to submit new BOI form

The US Treasury Department has extended the deadline for millions of small businesses to January 13, 2025, to file a new form, known as a beneficial ownership information report.

The Treasury had originally required many businesses to submit the report to the agency’s Financial Crimes Enforcement Network, known as FinCEN, by January 1. Non-compliance carries potential fines that can exceed $10,000.

This delay comes as a result of legal challenges to the new reporting requirement under the Corporate Transparency Act.

The rule applies to about 32.6 million businesses, including certain corporations, limited liability companies and others, according to federal estimates.

According to FinCEN, non-compliant businesses and owners will face civil penalties of up to $591 per day, adjusted for inflation. They can also face criminal fines of up to $10,000 and up to two years in prison.

However, many small businesses are exempt. For example, those with over $5 million in gross sales and more than 20 full-time employees may not need to file a report.

The Treasury delayed the compliance deadline following a recent court ruling.

A federal court in Texas on Dec. 3 had issued a nationwide preliminary injunction that temporarily blocked FinCEN from enforcing the rule. However, the 5th US Circuit Court of Appeals reversed that order on Monday.

“Because the Treasury Department recognizes that reporting companies may need additional time to comply given the period the preliminary injunction has been in effect, we have extended the reporting deadline,” according to FinCEN’s website.

FinCEN did not return a request from CNBC for comment about the number of businesses that have filed a BOI report to date.

However, some evidence suggests that few have done so.

The federal government had received about 9.5 million files as of Dec. 1, according to statistics FinCEN provided to the office of Rep. French Hill, R-Ark. This figure is about 30% of the estimated total.

Hill has called for repeal of the Corporate Transparency Act, passed in 2021, which created the BOI requirement. Hill’s office provided the data to CNBC.

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“Most non-exempt reporting companies have not filed their initial reports, apparently because they are unaware of the requirement,” Daniel Stipano, a partner at the law firm Davis Polk & Wardwell, wrote in an e-mail.

There’s an upside for businesses: FinCEN is unlikely to impose financial penalties “except in cases of bad faith or willful violations,” Stipano said.

“In its public statements, FinCEN has made it clear that its primary goal at this point is to educate the public about this requirement, as opposed to taking enforcement action against non-compliant companies,” he said.

BOI registration is not an annual requirement. Businesses only need to resubmit the form to update or correct information.

Many exempt businesses — such as large companies, banks, credit unions, tax-exempt entities and utilities — already provide similar data.

Businesses have different compliance deadlines depending on when they were formed.

For example, those created or registered before 2024 have until Jan. 13, 2025, to file their initial BOI reports, according to FinCEN. Those who do so on or after January 1, 2025, have 30 days to file a report.

There are likely to be additional court decisions that could affect reporting, Stipano said.

For one, litigation is ongoing in the 5th Circuit, which has not formally ruled on the constitutionality of the Corporate Transparency Act.

“Court actions challenging the law have been brought in multiple jurisdictions and these actions may ultimately reach the Supreme Court,” he wrote. “As of now, it is unclear whether the incoming Trump administration will continue to support the government’s position in these cases.”