The Treasury Department has announced a March 21 deadline for businesses to submit beneficial ownership information (BOI), under the enforcement of the Corporate Transparency Act. This decision follows the lifting of a nationwide injunction by the U.S. District Court for the Eastern District of Texas, which previously prevented the Financial Crimes Enforcement Network (FinCEN) from enforcing the Act. Businesses that fail to comply face potential civil penalties of up to $591 per day, adjusted for inflation, alongside the risk of criminal fines up to $10,000 and imprisonment for up to two years.
The Corporate Transparency Act, enacted by Congress in 2021, mandates that small businesses disclose the identities of individuals who directly or indirectly own or control them. This measure aims to combat money laundering and other illicit activities by preventing criminals from hiding behind shell companies or opaque ownership structures. Approximately 32.6 million businesses, including various corporations and limited liability companies, are subject to this reporting requirement.
The recent delay follows FinCEN's decision to postpone the previous deadline by 30 days due to legal proceedings. The injunction was lifted on February 18, allowing FinCEN to resume enforcement efforts. However, businesses have expressed concerns over the shifting deadlines, which have caused significant uncertainty and challenges in compliance.
FinCEN has indicated that it may prioritize enforcement against businesses posing significant national security risks. Additionally, the Treasury Department has hinted at the possibility of further delays in the deadline.
"FinCEN will provide an update before then of any further modification of this deadline, recognizing that reporting companies may need additional time to comply with their BOI reporting obligations once this update is provided," – FinCEN
This underscores the complexity and evolving nature of BOI reporting requirements.
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