Do you have to file a BOI report with FinCEN?
The appeal of the government to the initial injunction was reversed!
Does this confuse you? Welcome to the closing days of the Biden administration!
Answer: Businesses can hold off on filing until sometime in the future.
A little history will explain what is going on with this crazy legal mess. The Biden administration has repeatedly pushed to attack small businesses. In a claim of worrying about “money laundering,” the Biden administration pushed through a law in 2021 granting the Treasury Department with its Financial Crimes Enforcement Bureau to demand all kinds of information about the owners and controlling interests of small companies.
This law is the complete opposite of the usual regulations. FinCEN typically handles large corporations that are publicly traded. Suddenly, small businesses that do not have full-time lawyers, accountants, and government compliance staff are forced to provide substantial information to the government about their ownership, formation, and control. For some businesses, this could be a few hours of work. Unfortunately, for many small businesses, the task is impossible.
There is absolutely nothing in the U.S. Constitution that permits the government to compel this information. Several appeals have been made against the Treasury Department. An appeal in Alabama, National Small Business United, prevented the enforcement of the beneficial ownership information rules against members of one business Association. In the Top Cop case decided in the U.S. District Court on December 3, 2024, a nationwide injunction was put in place preventing enforcement against all businesses. This was a big win for the 40 million small businesses in the United States.
What did the Biden administration do? Of course, it had the Treasury Department appeal the injunction. The Fifth Circuit granted the Treasury Department’s appeal while the case was being decided. With glee, FinCEN announced that it was requiring all businesses to file by January 13, 2025, or face penalties of approximately $540 per day and up to two-year jail sentences for small business managers.
This was appealed to the entire Fifth Circuit Court of Appeals, which decided on the night of December 26, 2024, to reinstate the temporary injunction until the case is decided. Please see the Court Order. While the Treasury Department continues to appeal this, it has announced the following on the FinCen website:
In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports. Beneficial Ownership Information Reporting | FinCEN.gov
What will happen now?
The requirement for filing Beneficial Ownership Information reports is on hold until the Fifth Circuit makes its final decision. If the taxpayers win, I anticipate the Treasury Department will appeal to the U.S. Supreme Court. On the other hand, when administrations change on January 20, 2025, there will hopefully be actions to drastically alter or eliminate this intrusive law.
What should businesses do?
- Do not file the information now. Suppose the law changes or the case determines that the Biden administration’s law is unconstitutional. In that case, this information does not have to be revealed to the treasury.
- Prepare for the filing. Small business owners should get the information together so that if a filing requirement with a short timeframe is required, the data is available and the filing can be made.
- Because the FinCEN website does not have a way to save the information that the company is filing, I have a database where the information can be saved for our clients. Please call our office for the most updated form. If you want to prepare the information yourself, we also have a website with the form so it can be retained for required amendments:
- Stay tuned for future changes in the law!
RJC – December 28, 2024
