U.S. Treasury Secretary Janet Yellen during a visit to the Financial Crimes Enforcement Network (FinCEN) in Vienna, Virginia, January 8, 2024.
Valérie Plesch/Bloomberg via Getty Images
An upcoming Treasury Department deadline for millions of small businesses to fulfill a new reporting requirement on “beneficial ownership information” was again delayed, following a court decision suspending execution.
The regulation, which would require small businesses to disclose the identities of individuals who directly or indirectly own a controlling company, is designed to prevent criminals from hiding illicit activities conducted through shell companies or opaque ownership structures, Treasury said.
The 5th U.S. Circuit Court of Appeals issued an order on Dec. 26 that stayed enforcement while the court “considers the parties’ significant substantive arguments” on the constitutionality of the Corporate Transparency Act, which created the BOI reporting requirement, the order states.
The new deadline, set for January 13, is now unclear.
“While it is unclear how long the injunction will remain in effect, the matter is scheduled for oral argument. in bench on March 25, 2025, so we expect the injunction to be effective at least until March,” Daniel Stipano, a partner at the law firm Davis Polk & Wardwell, wrote in an email.
Meanwhile, companies are not required to file BOI reports with the Financial Crimes Enforcement Network, known as FinCEN, which is part of Treasury.
Companies are not held responsible at this time
Boost for small businesses
This delay represents a small legal boost for small business owners.
On December 3, a federal court in Texas temporarily blocked Treasury from enforcing the BOI reporting rules, which were then scheduled to take effect on January 1, 2025.
Then, on December 23, a 5th Circuit motions panel lifted that enforcement injunction after an appeal from the federal government. On December 26, another commission of the same appeals court – the merits commission – reinstated the injunction.
“Ultimately, no one needs to file a BOI report – unless and until the injunction is lifted,” Stipano explained in an email.