Small Business Owners Get Temporary Reprieve from Reporting Requirement
A recent court order has suspended the enforcement of a new reporting requirement for millions of small businesses, providing a temporary reprieve from the looming deadline. The 5th U.S. Circuit Court of Appeals issued the order on December 26, halting enforcement of the Corporate Transparency Act’s beneficial ownership information (BOI) reporting requirement.
What This Means for Small Businesses
The original deadline for submitting BOI reports to the Financial Crimes Enforcement Network (FinCEN) was January 13, but it is now unclear when the new deadline will be. In the meantime, businesses are not required to file BOI reports, and they will not be subject to liability for non-compliance.
Background on the Corporate Transparency Act
The Corporate Transparency Act aims to prevent criminals from hiding illicit activities through shell companies or opaque ownership structures. The law requires certain businesses to report beneficial ownership information to help the federal government identify individuals who directly or indirectly own or control a company.
Who Is Affected by the Rule?
The rule applies to approximately 32.6 million businesses, including corporations, limited liability companies, and others. However, many businesses are exempt from the requirement, such as those with more than $5 million in gross sales and more than 20 full-time employees.
Voluntary Reporting Still an Option
Although enforcement is suspended, businesses can still voluntarily submit beneficial ownership information reports to FinCEN.
Legal Whiplash for Small Business Owners
This development represents a reversal of fortune for small business owners, who have faced a series of legal twists and turns in recent weeks. On December 3, a federal court in Texas temporarily blocked the Treasury from enforcing BOI reporting rules, only to have the injunction lifted on December 23. The latest order from the 5th Circuit Court of Appeals has put the injunction back in place.
What’s Next?
The case is scheduled for oral argument on March 25, 2025, and it is unclear how long the injunction will remain in effect. In the meantime, small business owners can breathe a sigh of relief, knowing they are not required to file BOI reports or face penalties for non-compliance.
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