An Upcoming Treasury Department Deadline for Small Businesses Delayed Again
The Treasury Department’s deadline for millions of small businesses to fulfill a new reporting requirement on “beneficial ownership information” has been delayed again. The delay comes after a court order suspended enforcement of the regulation, which requires small businesses to disclose the identity of people who directly or indirectly own a company.
The regulation is designed to prevent criminals from hiding illicit activity conducted through shell companies or opaque ownership structures. The 5th U.S. Circuit Court of Appeals issued an order on December 26 to halt enforcement while the court considers the constitutionality of the Corporate Transparency Act, which created the BOI reporting requirement.
As a result, the new deadline, which was previously set for January 13, is now unclear. Businesses are not required to file BOI reports to the Financial Crimes Enforcement Network, also known as FinCEN, which is part of the Treasury. Businesses do not face liability for the time being.
The delay is a bit of legal whiplash for small business owners. A federal court in Texas temporarily blocked the Treasury from enforcing BOI reporting rules in December, and then a motions panel of the 5th Circuit lifted that injunction. However, on December 26, a different panel of the 5th Circuit put the injunction back into place.
“The bottom line is that no one needs to file a BOI Report – unless and until the injunction is lifted,” said Daniel Stipano, a partner at law firm Davis Polk & Wardwell.
