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15 • 2024

FinCEN Beneficial Ownership Information Reporting Deadlines

On January 1, 2021, Congress passed the Corporate Transparency Act (“CTA”) as part of the annual National Defense Authorization Act.[1] Congress passed the CTA based on its “sense” that a “clear, federal standard for incorporation practices” is required to prevent “malign actors” from concealing their ownership of business entities to engage in money laundering, because “most or all States do not require information about the beneficial owners of the” business entities formed under state law.[2] To that end, the CTA requires many millions of private corporations, limited liability companies, and other business entities formed under state or tribal law to report to the Financial Crimes Enforcement Network (“FinCEN”) of the U.S. Department of the Treasury certain information about each beneficial owner of the entity, as well as each person who actually files the application to form the entity or register it to do business in a U.S. jurisdiction.[3]

The CTA tied the new beneficial ownership information (“BOI”) reporting requirements to the effective date of final regulations issued by FinCEN to implement the CTA, which was to have occurred no later than January 1, 2022.[4] However, FinCEN did not actually adopt its final rule (the “BOI Reporting Rule”) implementing the reporting requirements of the CTA until September 30, 2022, with an effective date of January 1, 2024.[5] Thus, under both the CTA and the BOI Reporting Rule, the BOI reporting requirements are in effect and FinCEN is accepting e-filed BOI reports from reporting companies through its website.[6]

Current Reporting Deadlines

As things currently stand, the deadlines for reporting companies to file BOI reports with FinCEN are as follows:

  • Companies that are formed or registered to do business in the United States on or after January 1, 2024 but before January 1, 2025 have 90 calendar days after receiving actual or public notice that their company’s formation or registration is effective to file their initial BOI reports;[7]
  • Companies that are formed or registered to do business in the United States on or after January 1, 2025 will have 30 calendar days from receipt of actual or public notice that their company’s formation or registration is effective to file their initial BOI reports;[8] and
  • Companies that were formed or registered to do business in the United States before January 1, 2024 will have until January 1, 2025 to file their initial BOI reports.[9]

Potential Congressional Action to Extend the Current Reporting Deadlines

On December 12, 2023, by a vote of 420 to 1, the U.S. House of Representatives passed H.R. 5119, titled the “Protect Small Business and Prevent Illicit Financial Activity Act.”[10] The stated goal of the legislation is “to provide small businesses with additional time to file beneficial ownership information.”[11] To that end, the bill proposes to amend the CTA to extend the deadline for existing entities (that is, those entities formed before January 1, 2024) to file their initial BOI report to “not later than 2 years after the effective date of the” BOI Reporting Rule, which was January 1, 2024.[12] That would give existing companies an extra year to file their initial report, by postponing the required filing date from January 1, 2025 to January 1, 2026. The bill also proposes to amend the CTA to give all reporting companies formed or registered on and after January 1, 2024 (not just those companies formed between January 1 and December 31, 2024) 90 days after their formation or registration to file their initial BOI reports.[13] The bill would also permit reporting companies to file updated reports to reflect changes in BOI within 90 days after the date on which there is a change.[14] As the statements accompanying passage of the bill make clear, however, the House is completely on board with the reporting requirements imposed under the CTA as originally enacted, and the bill, if it becomes law, will merely delay some of the deadlines for reporting to give small businesses some additional time to comply.[15]

On December 13, 2023, the day after the House passed H.R. 5119, the bill was received in the Senate and read twice and referred to the Senate Committee on Banking, Housing, and Urban Affairs.[16] At this time, it is unknown what action, if any, the Senate will take with regard to the bill. Until such time as the bill may become law, the current BOI reporting deadlines set by FinCEN remain in effect.

Pending Lawsuit

There is one final curveball. On November 15, 2022, not long after FinCEN adopted the BOI Reporting Rule, the National Small Business Association and Isaac Winkles, an Alabama resident who owns an Alabama corporation subject to the reporting requirements of the CTA, filed a lawsuit in the United States District Court for the Northern District of Alabama against the Department of the Treasury, its secretary Janet Yellen, and Himamauli Das, the acting director of FinCEN, challenging the constitutionality of the CTA on various grounds, including that it usurps the states’ power to regulate entity formations in excess of Congress’s power to regulate commerce and invades privacy.[17] On February 15, 2023, the plaintiffs filed a motion for summary judgment. On March 29, 2023, the defendants filed their own motion to dismiss the lawsuit, or in the alternative for summary judgment. Various organizations, including the Main Street Alliance and the Financial Accountability and Corporate Transparency Coalition, were permitted by the court to file amicus briefs in support of the government’s motion to dismiss the action or for summary judgment. The court finally heard the motions on November 20, 2023, but the court has not yet issued a decision. If the court were to grant summary judgment in the plaintiffs’ favor and rule that the CTA is unconstitutional on one or more grounds, that ruling would certainly be appealed by the government. In the meantime, the BOI reporting requirements under the CTA would be in limbo. However, while it is nearly impossible to predict the outcome of any particular lawsuit, actions challenging the constitutionality of U.S. statutes rarely succeed, and this one does not seem to have any greater merit than the usual such challenge. As such, it is very unlikely that the pending lawsuit will have any impact whatsoever on the BOI reporting requirements as enacted by Congress and put in place by FinCEN.

Penalties for Noncompliance

Given that neither the House bill nor the pending lawsuit is likely to do away with the BOI reporting requirements, it makes sense to comply fully with the current reporting requirements and deadlines. That is especially true given the severe penalties for willfully failing to file complete BOI reports as required by the CTA and BOI Reporting Rule, which include (1) a civil penalty of up to $500 a day for unremedied violations, and (2) a fine of up to $10,000, imprisonment for up two years, or both.[18]

[1] National Defense Authorization Act, Pub. L. No. 116-283, §§ 6401 to 6403, 134 Stat. 3388 (2021). The CTA is codified at 31 U.S.C. § 5336.

[2] Pub. L. No. 116-283, § 6402(2)-(5).

[3] 31 U.S.C. § 5336(b)(1).

[4] Id. § 5336(b)(5) (“The requirements of this subsection shall take effect on the effective date of the regulations prescribed by the Secretary of the Treasury under this subsection, which shall be promulgated not later than 1 year after the date of enactment of this section.”).

[5] See FinCEN, Beneficial Ownership Information Reporting Requirements, 87 FR 59,498 (Sept. 30, 2022). The BOI Reporting Rule is codified at 31 C.F.R. § 1010.380. For a general description of the BOI Reporting Rule, see eMinutes, FinCEN Reporting — Yes It Is Really Happening (Feb. 23, 2023).

[6] See FinCEN, Welcome to the BOI E-Filing System.

[7] 31 C.F.R. § 1080(a)(1)(i)(A), (ii)(A); FinCEN, Small Entity Compliance Guide v. 1.1, at 42 (Dec. 2023) [hereinafter “Small Entity Compliance Guide”].

[8] 31 C.F.R. § 1080(a)(1)(i)(B), (ii)(B); Small Entity Compliance Guide, supra note 7, at 42.

[9] 31 C.F.R. § 1080(a)(1)(iii); Small Entity Compliance Guide, supra note 7, at 42.

[10] See Congress.gov, H.R. 5119 – Protect Small Business and Prevent Illicit Financial Activity Act.

[11] H.R. Rep. No. 118-303, at 1; see also id. at 2 (extending the deadline to match “Congress’ intended timeframe … will provide small businesses with the much-needed time to fully grasp the new requirements and comply”); 169 Cong. Rec. H6753 (daily ed. Dec. 11, 2023) (statement of Rep. Garcia) (“This bill would offer reporting businesses additional time to file their CTA information, pushing back a handful of deadlines.”).

[12] H.R. 5119 § 2 (proposing to amend 31 U.S.C. § 5336(b)(1)(B)).

[13] Id. (proposing to amend 31 U.S.C. § 5336(b)(C)).

[14] Id. (proposing to amend 31 U.S.C. § 5336(b)(D)). The BOI Reporting Rule only allows 30 days to submit an updated report. See 31 C.F.R. § 1080(a)(2)(i); Small Entity Compliance Guide, supra note 7, at 45.

[15] 169 Cong. Rec. H6752-6753 (daily ed. Dec. 11, 2023) (statements of Reps. Nunn and Garcia (“The collection of information on beneficial owners of certain corporations, limited liability companies, and other entities registered in the United States will help protect our financial system from illicit use by making it even more difficult for bad actors to disguise their financial activities through entities with complex ownership structures.”)).

[16] See Congress.gov, H.R.5119 – Protect Small Business and Prevent Illicit Financial Activity Act, all actions.

[17] See National Small Business United d/b/a National Small Business Association and Winkles v. Yellen et al., Case No. 5:2-cv-01448-HNJ, ECF No. 1 (complaint).

[18] See 31 U.S.C. § 5336(h)(3)(A).