The U.S. Treasury Department pushed back the deadline to Jan. 13, 2025, for millions of small businesses to submit a new form known as Beneficial Ownership Information Report.

Treasury initially demanded that many businesses file the report with the Financial Crimes Enforcement Network (FinCEN), an agency of the Treasury, by January 1. The Treasury could impose fines of up to $10,000 for non-compliance.

The delay is due to legal challenges against the new Corporate Transparency Act reporting requirements.

According to estimates by the federal government, this rule applies to approximately 32.6 million businesses including corporations, limited liability companies, and other types of business.

FinCEN estimates that businesses and owners who did not comply could face civil penalties of up to $591 per day, adjusted to inflation. FinCEN says that they could face criminal fines of up to $10,000 and a maximum two-year prison sentence.

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.

Why Treasury delayed the BOI Reporting Requirement

Treasury has delayed the deadline for compliance following a recent ruling by a court.

On Dec. 3, a federal court in Texas issued a nationwide preliminarily injunction which temporarily prevented FinCEN from enforcing this rule. The 5th U.S. On Monday, the 5th U.S.

FinCEN’s website states that “the Department of the Treasury has extended the deadline for reporting because it recognizes the need of reporting companies to have additional time to comply, given the period during which the preliminary injunction was in effect.”

FinCEN did not respond to a request for comments about the number of businesses that have submitted a BOI Report up until now.

Nevertheless, some data suggests that few have.

FinCEN statistics provided to Rep. French Hill’s office, R-Ark, show that the federal government received 9.5 million filings by Dec. 1. This figure represents about 30% of total estimated filings.

Hill has called for the repeal of the Corporate Transparency Act passed in 2021 which created the BOI requirements. Hill’s office supplied us with the data.

Daniel Stipano is a partner of Davis Polk & Wardwell. He wrote an e-mail stating, “Most non-exempt companies haven’t filed their initial report, presumably because they are unaware of this requirement.”

Stipano noted that there is a silver lining: FinCEN will “unlikely,” impose penalties on businesses “except for cases of bad faith and intentional violations.”

He said, “FinCEN’s public statements made it clear that the primary goal of the organization at this time is to educate the general public on the requirements, rather than to take enforcement action against non-compliant companies.”

Some businesses are exempted from filing BOI

It is not necessary to file the BOI every year. Businesses can resubmit a form only to correct or update information.

Several exempt businesses, such as large corporations, banks, credit Unions, tax-exempt organizations, and public utilities, already provide similar data.

Businesses are subject to different deadlines for compliance depending on their formation date.

FinCEN says that those who were created or registered prior to 2024 will have to wait until January 13, 2025, to submit their first BOI report. FinCEN says that those who do this on or after January 1, 2025, have 30 days to submit a report.

Stipano believes that there will be more court decisions that could affect reporting.

One of these is that litigation continues in the 5th Circuit. This court has not yet ruled on whether the Corporate Transparency Act is constitutional.

He wrote, “Judicial challenges to the law are being brought in many jurisdictions and may reach the Supreme Court.” As of yet, it’s unclear whether the new Trump administration will support the Government in these cases.