In This Story
Small business owners that fail to meet a new federal reporting requirement could face fines of up to $10,000.
The deadline to submit a Beneficial Ownership Information (BOI) Report to the Treasury’s Financial Crimes Enforcement Network (FinCEN) is Jan. 1, 2025.
“Those who fail to file by this deadline — or fail to update this information if needed — could face up to two years imprisonment, in addition to civil penalties of up to $591 per day,” said the U.S. Chamber of Commerce, in a statement.
The Corporate Transparency Act (CTA), passed in 2021, first gained attention when it was signed into law, but its reporting requirement didn’t fully go into effect until this year. The law aims increase transparency around business ownership and combat illicit finance, such as tax evasion and money-laundering. With the hard deadline fast approaching, small businesses owners may need to act fast to avoid the costly penalties. The requirement applies to more than 32 million businesses, according to Reuters (TRI-0.93%).
While the CTA does not require businesses to submit annual reports, updates may be necessary if certain changes occur after the filing, the U.S. Chamber of Commerce noted.
Roger Harris, president of Padgett Business Services, a financial services firm, explains that updates are required when an owner’s address, name, or legal status changes, or when operational shifts or new delegations of authority are implemented. These updates must be filed within 30 days of the change, he added.
Critics, however, argue that FinCEN has not done enough to communicate the CTA requirements or providing adequate reporting guidance. They also raise constitutional concerns, claiming the reporting mandates violate the First, Fourth, and Fifth Amendment. Last week, a federal district court in Texas ruled the law was unconstitutional and temporarily blocked nationwide enforcement.