March Corporate Transparency Act Update – No Fines or Penalties
Pending further rulings to be made no later than March 21st, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) will no longer be issuing fines or penalties related to Beneficial Ownership Information (BOI) Reporting requirements. This decision comes hot on the heels of a federal court ruling on February 18th that reinstated FinCEN’s right to enforce these requirements.
While future statements from the Treasury and FinCEN may still change the course of the Corporate Transparency Act (CTA)—and by extension, the BOI Report—this represents a major win for U.S. businesses already feeling the burden of filing requirements at state and federal levels.
Northwest has worked tirelessly to be a leading resource on all things CTA- and BOI-Report-related. Get the full story by checking out our blog posts covering the February 18th stay on the injunction in Smith, et al. v. U.S. Department of the Treasury, et al, January 23rd stay on the injunction, December 26th injunction reinstatement, December 23rd stay on the injunction, and, finally, the December 3rd Texas injunction that started it all.
Is the BOI Report mandatory?
Yes, but it’s not that simple. As of February 27th, FinCEN has released an official statement confirming it will not be issuing fines or penalties nor taking any other action to enforce BOI Report requirements. However, FinCEN has expressed its intention to release final rules and deadlines for the BOI Report, including changes to the scope of companies required to file, no later than the new deadline for existing reporting companies of March 21st.
What’s been going on with the Corporate Transparency Act?
The BOI Report, a requirement under the Corporate Transparency Act of 2021, has been under fire since it became mandatory in 2024 for most businesses operating in the U.S., with very few businesses exempt from BOI Report filing. Here are the key facts about the BOI Report:
The intention: To reduce financial crime and money laundering by requiring reporting companies to disclose information on the beneficial parties of their businesses.
The requirements: Provide identifying information on the individuals who either exercise control in the company or owns 25% of it called beneficial owners and for some businesses, the person who files the company’s formation documents (company applicants ).
Smith, et al. v. U.S. Department of the Treasury, et al. and Texas Top Cop Shop, Inc. v. McHenry got the ball rolling against the CTA and BOI Report to halt or abolish BOI Reporting requirements. These two cases have lost steam recently with stays granted to their injunctions—essentially removing the roadblock they created against BOI Report enforcement. That said, they likely still contributed to FinCEN and the Treasury’s recent decision to halt penalties for the time being.
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The Treasury’s BOI Report suspension for U.S. companies
On March 2nd, the U.S. Treasury Department added more context to FinCEN’s statement regarding BOI Report fees and penalties. The Treasury’s press release confirmed that FinCEN will not be taking any action to enforce BOI Report filings requirements.
Then it went a step further and added that U.S. LLCs, corporations, and other businesses would still not see any enforcement after the final ruling expected no later than March 21st. Whether this will change based on final rulings later this month is still up in the air.
Ongoing resistance against the BOI Report
Many parties have pushed back on the filing requirement due to its overreach on the privacy of business owners, and the burdensome requirement for updates should the beneficial owner information change. This, coupled with steep fines for failure to file or update your BOI Report, put additional undue stress on small businesses who were unlikely to be involved in any financial crimes.
FinCEN stated in their February 27th press release that they’d be making more updates before the current stated deadline of March 21st, “FinCEN intends to issue an interim final rule that extends BOI reporting deadlines.” So the resistance against the Report is being noticed by FinCEN.
BOI Report – To file or not to file?
Until FinCEN releases further information, the BOI Report is still a mandatory filing that just isn’t being enforced for all businesses operating in the U.S. Business owners can still choose to file a BOI Report on the off-chance enforcement is reinstated, but choosing not to will not yield any penalties.
Stay on the lookout for updates from FinCEN and the Treasury regarding the BOI Report, and follow along with Northwest as we remain a leading resource on the topic.
