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It’s enough to make you seasick, all the twists and turns, stops and starts, injunctions and stays that have defined the Beneficial Ownership Information (BOI) reporting requirements. If you’re looking for the bottom line, here it is: As of this writing, most business owners are officially required to complete their BOI reporting by March 21.
You can file for free at fincen.gov/boi. And if you’d rather not take the time (30 to 60 minutes) to file it yourself, you can always hire out a third-party service to handle this for you.
Related: ‘Enormous Chaos and Confusion’: Do You Need to File a BOI Report? After Another New Ruling, Here’s What Business Owners Need to Know.
Will the BOI reporting requirement be rescinded (again)?
If we look to recent history as our guide, the requirement could very well be rescinded, then reapplied, then rescinded and reapplied again, multiple times over. It’s like a game of musical chairs, which is why I recommend that you go ahead and claim your seat now, so you don’t, God forbid, blink and find yourself late on your filing and subject to hundreds of dollars in daily fines.
It’s worth noting that the U.S. Department of Treasury is aware of how volatile the process has been and is open to further modifications on the deadlines imposed and the scope of businesses affected:
…in keeping with Treasury’s commitment to reducing the regulatory burden on businesses, during this 30-day period, FinCEN will assess its options to further modify deadlines while prioritizing reporting for those entities that pose the most significant national security risks. FinCEN also intends to initiate a process this year to revise the BOI reporting rule to reduce the burden for lower-risk entities, including many U.S. small businesses.
Who is required to file, and who is not?
Most corporations, LLCs and other entities formed by filing documents with a Secretary of State’s office are required to file a BOI report by March 21. There are 23 types of entities that are exempt. In general, the exempt companies are those that are already subject to extensive oversight with regard to their beneficial ownership information. Exempt entities include publicly traded companies, insurance companies, credit unions, banks and certain regulated investment firms.
Another common exemption is the exemption for “large operating companies,” which are defined according to the following criteria:
- They must employ more than 20 full-time employees in the U.S.
- They must have a physical office in the U.S.
- They must have filed a return from the previous year showing $5 million or more in gross receipts or sales.
Sole proprietorships are, of course, exempt from BOI reporting, because they are not legally separate entities from their owners, i.e. a sole proprietor is already legally required to report their business income under their own name.
A full and complete list of the 23 exemptions can be found in section C.2 of the BOI-FAQ.
Related: This New Under-the-Radar Regulation Will Impact Most Businesses. Here’s What You Need to Know.
The chaotic chronicles of BOI
The requirement to report the BOI for your business was born of an act that passed through Congress in 2021 called the Corporate Transparency Act (CTA). The act passed with bipartisan support and was a part of the larger National Defense Authorization Act for Fiscal Year 2021. The main purpose of the CTA was to curb criminal money laundering. Prior to its enactment, business ownership details (who actually benefits financially from the proceeds of a given corporation, LLC, etc.) were difficult or impossible to obtain, often purposefully so. State records became clogged with filings for bogus entities and multi-layered shell companies that could be used to hide one’s criminal dealings and/or cheat on one’s taxes.
Per the CTA, the BOI reporting requirement went into effect Jan. 1, 2024. Non-exempt businesses were given a full year to file the report and would were warned of steep fines, even jail time, should they miss the Jan. 1, 2025 deadline.
Not every business owner, however, was jumping out their skin to comply. Some even questioned the constitutionality of the mandate. On May 28, 2024, a group of plaintiffs, led by a gun shop in Texas, filed suit against former U.S. Attorney General Merrick Garland, alleging that actions to enforce the CTA were unconstitutional and, hence, beyond the scope of congressional power.
Fast-forward seven months: the plaintiffs won a motion for a preliminary injunction in the case, and the ramifications were heard nationwide. Enforcement of BOI reporting was on hold and, presumably, would remain so until the case was decided. A few weeks later, another monkey wrench: the U.S. government brought an emergency motion to the Fifth Circuit Court of Appeals that, if granted, would allow enforcement of BOI reporting while the other case — the gun store et al vs. the U.S. Attorney General — was decided in the federal district court.
The government’s motion was granted, and the BOI reporting requirement was back on. But before the year came to a close, the Fifth Circuit would produce yet another change of course. On Dec. 26, 2024, a merits panel for the Fifth Circuit vacated the stay issued by the motions panel, which reinstated the district court’s preliminary injunction. This was done, they said, to “preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments.” So, voila, business owners could again breathe easy if they had yet to file their BOI report.
And this brings us to Feb. 17, when the enforcement requirement was yet again turned on following the district court’s reinstating of the stay, which the Fifth Circuit had vacated. This latest development allows the law to be enforced while the U.S. Attorney General (no longer Merrick Garland) appeals an earlier ruling that declared the law unconstitutional.
Should the appeal fail, then the reporting requirement will, yet again, go away, but as of now it stands. Want my advice? Don’t dizzy yourself by tracking this back-and-forth soap opera any longer. Just file and be done with it.
