Sometimes it’s okay to procrastinate.
I had been reminding a friend for several months that he needed to file his Beneficial Ownership Information (BOI) for his Delaware LLC.
BOI reporting is required as part of the Corporate Transparency Act (CTA), which went into effect in January 2024 and required companies to file a BOI Report (BOIR) for all US corporations and LLCs.
A BOIR is basically a document that identifies who owns a business by providing personal details like names, addresses, and dates of birth. It was technically due on December 31, 2024.
Until it wasn’t.
On December 23, 2024, the U.S. Court of Appeals allowed the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to enforce BOI reporting after a judge for the U.S. District Court for the Eastern District of Texas prevented FinCEN from enforcing it earlier this month.
The ruling prompted the Treasury Department to push the deadline to file a BOI report from January 1 to January 13.
However, on December 26, 2024, the “merits” panel of U.S. Court of Appeals for the Fifth Circuit reinstated the injunction that prevented FinCEN from enforcing the CTA.
As a result, companies are not currently required to file BOI reports under the CTA.
This was confirmed by FinCEN on December 27, 2024 by the issuance of the following statement:
In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.
So while there now appears to be a reprieve from the immediate compliance obligations under the CTA, the matter is far from settled and will be subject to any of the following; the Fifth Circuit’s merits decision (oral arguments scheduled for March 25, 2025), decisions in other pending cases, potential appeals to the U.S. Supreme Court, or possible actions by Congress or the executive branch.
So can business owners who haven’t yet filed just keep procrastinating or should they observe the January 13 deadline?
Seems the procrastinators are not alone. As of December 1, the federal government had only received 9.5 million BOI filings, or about 30% of the 32.6 million total expected, per CNBC.
But procrastinators take note, once there is a deadline in place, failing to file the BOI report could cost small businesses up to $591 per day, up to $10,000 in fines, and up to two years in prison.
As of January 2, 2025, FinCEN had the following posted prominently on its BOI filing page:
More information is available on our website (https://www.fincen.gov/boi).
The odds are that sooner or later there will be some concrete guidance and a definitive deadline.
So if I were my procrastinating friend, I would probably opt to voluntarily file and opt out of having to follow the legal ping pong that is surely to follow in the coming months.
– John Briner