717.761.7171

Beneficial Ownership Information: Penalty Delays and Uncertain Future

Beneficial Ownership Information: Penalty Delays and Uncertain Future

On March 2, 2025, the Treasury Department announced the suspension of its enforcement of the Corporate Transparency Act (CTA) against U.S. citizens and domestic reporting companies. The Department will not enforce any penalties or fines associated with beneficial ownership information (BOI) reporting under existing regulatory deadlines against American citizens, reporting companies located within the U.S. or their beneficial owners, should they miss the current extended deadlines. The Department of Treasury has announced that it will be issuing a rulemaking that will narrow the scope of BOI reporting under the law to foreign reporting companies only.

Updated Deadlines for Businesses

On February 18, 2025, the United States District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex.), granted the Financial Crimes Enforcement Network (FinCEN) a stay on its previously issued preliminary nationwide injunction on the enforcement of the CTA. As a result of this decision, BOI reporting requirements are now again mandatory; however, penalties or fines associated with filing past the current deadline have been suspended at this time.

The new BOI deadlines as announced by FinCEN are as follows:

  • March 21, 2025, is the new deadline for most reporting companies to file an initial, updated and/or corrected BOI report. FinCEN will provide an update before this deadline in case any further modifications are required. FinCEN recognizes that reporting companies may need additional time to comply with their BOI reporting obligations.
  • Reporting companies that were previously given a reporting deadline later than the March 21, 2025, deadline must file their initial BOI report by that later deadline. For example, if a company has an April 2025 reporting deadline because it qualifies for disaster relief extensions, it should follow the April deadline instead of the March deadline.
  • Plaintiffs in National Small Business United v. Yellen are not required to report BOI to FinCEN at this time.

Reporting companies can report BOI directly to FinCEN, free of charge, using FinCEN’s E-Filing system. At this time, FinCEN will not issue fines to companies that miss the March 21 initial deadline to comply with the law. They will wait to begin penalties and enforcement actions until an interim final rule takes effect or Congress takes additional action.

What’s Next in Congress?

Recently, the House of Representatives passed H.R. 736, Protect Small Businesses From Excessive Paperwork Act of 2025. This bill would extend the deadline for filing BOI reports to January 1, 2026, for reporting companies formed before January 1, 2024. Originally, the deadline was January 1, 2025, but the reporting requirements were put on hold due to numerous court cases and later extended by the Department of Treasury to March 21, 2025.  Currently, the Department of Treasury is not enforcing this deadline for domestic reporting entities and U.S. Citizens. A companion bill was introduced in the Senate and is currently awaiting a vote.

Timeline of BOI

Since BOI was first introduced, there have been numerous court cases delaying the implementation of BOI reporting. Below is a timeline of recent developments:

  • March 2, 2025 – The Treasury Department announces suspension of enforcement of CTA against U.S. citizens and domestic reporting companies.
  • February 27, 2025 – FinCEN announced that it will not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update BOI reports pursuant to the CTA by the current deadlines.
  • February 18, 2025 – The U.S. District Court for the Eastern District of Texas agrees to stay its January 7, 2025, order, until the appeal in the Smith case is completed.
  • January 23, 2025 – The U.S. Supreme Court grants a stay of the December 3rd injunction, pending the disposition of the Texas Top Cop Shopappeal before the Fifth Circuit and the disposition of a petition for a writ of certiorari and related final judgement.
  • January 7, 2025 – The U.S. District Court for the Northern District of Texas issues a second nationwide injunction enjoining enforcement of the CTA, suspending all reporting obligations under the CTA.
  • December 31, 2024 – The Department of Justice files an application for stay with the U.S. Supreme Court, requesting that the December 5th injunction be stayed or narrowed while the case proceeds through the Fifth Circuit.
  • December 26, 2024 – U.S. Fifth Circuit Merits Panel reinstates the nationwide injunction on the CTA.
  • December 23, 2024 – U.S. Fifth Circuit lifts the injunction and FinCEN extends the BOI filing deadline to January 13, 2025.
  • December 2, 2024 – Texas District Court issues a nationwide injunction on the CTA.
  • January 1, 2021 – CTA was signed into law and went into effect on January 1, 2024. The original reporting deadline for BOI was January 1, 2025.

Brown Plus will continue to keep clients posted on the CTA and BOI reporting requirements. For the latest updates, please visit the Brown Plus Blog: BOI Category page.

Posted In: Insights | BOI

About the Author - Sherry Cracium-Bolin, CPA

Sherry is a Tax Principal and Shareholder of Brown Plus. Having over 20 years of progressive public accounting experience, Sherry assists small and mid-sized businesses through tax planning, management advisory services and compliance services. She also specializes in tax planning and compliance for individuals, estates and trusts.

Sherry received her Bachelor of Science degree in Accounting from York College of Pennsylvania.

Disclaimer: Information provided by Brown Plus as part of this blog post is intended for reference and information only. As the information is designed solely to provide guidance and is not intended to be a substitute for someone seeking personalized professional advice based on specific factual situations, responding to such inquiries does NOT create a professional relationship between Brown Plus and the reader and should not be interpreted as such. Although Brown Plus has made every reasonable effort to ensure that the information provided is accurate, Brown Plus makes no warranties, expressed or implied, on the information provided. The reader accepts the information as is and assumes all responsibility for the use of such information.