February 2025 Update: Corporate Transparency Act reporting requirements back in effect
Following the U.S. District Court for the Eastern District of Texas ruling on February 18, 2025, in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex.), the beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) are once again in effect. Recognizing that reporting companies may require additional time to comply, the Department of the Treasury has directed FinCEN to generally extend the deadline by 30 calendar days from February 19, 2025, for most companies.
During these 30 days, FinCEN will assess its options to modify deadlines further while prioritizing reporting for entities with the most significant national security risks. FinCEN also intends to initiate a process to revise the BOI reporting rule this year to reduce the burden for lower-risk entities, including many U.S. small businesses.
For more information, see FinCEN Notice, FIN-2025-CTA1, FinCEN Extends Beneficial Ownership Information Reporting Deadline by 30 Days.
Updated Deadlines
- For the vast majority of reporting companies, the new deadline to file an initial, updated, and/or corrected BOI report is now March 21, 2025. FinCEN will provide an update before then of any further deadline modification.
- Please note: Reporting companies may need additional time to comply with their BOI reporting obligations once this update is provided.
(Reporting companies 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’s reporting deadline is in April 2025 because it qualifies for specific disaster relief extensions, it should follow the April deadline, not the March deadline.)
- Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv01448 (N.D. Ala.)-namely, Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024)-are not currently required to report their beneficial ownership
information to FinCEN at this time.
As regulations get tougher on financial transparency and money laundering, FinCEN has introduced a new requirement for entities like LLCs and corporations to report Beneficial Ownership Information (BOI) by December 31, 2024. This is so the government can track who owns and controls all the business entities, to prevent illegal activities. Non-compliance will result in severe financial and legal penalties.
In this article we’ll cover the basics of the BOI reporting requirement, what’s involved, who needs to comply, the penalties for non-compliance and how a CPA firm can help you with this process. We’ll also give you actionable steps to stay compliant and minimize risk.
What Is Beneficial Ownership Reporting?
Beneficial Ownership Reporting, under the Corporate Transparency Act (CTA), requires business entities to disclose their beneficial owners to FinCEN. A beneficial owner is any individual who owns or controls at least 25% of an entity or has significant influence over its operations. The primary goal of this law is to improve transparency in financial transactions, reduce money laundering, and prevent illegal financial practices by requiring businesses to disclose key ownership information.
Beneficial Ownership Reporting: Who Needs to Comply?
This reporting requirement applies to nearly all LLCs and corporations in the U.S., especially smaller entities that might not have previously disclosed ownership information at this level. Notably, FinCEN requires beneficial ownership reporting for:
- Multi-member LLCs
- Corporations, including S-corporations and C-corporations
- Certain single-member LLCs engaged in business or rental activities
Exemptions to the Rule
There are a few exceptions to the rule, such as large corporations with over 20 employees, $5 million in gross receipts, and a physical office in the U.S., or regulated entities like banks and insurance companies. However, these exemptions are relatively narrow, so it’s essential for business owners to verify whether their entity qualifies for reporting.
What Information Is Required?
The BOI report must contain specific information on each beneficial owner, including:
- Full legal name
- Date of birth
- Current residential or business address
- Unique identifying number, which can be a driver’s license, passport, or other government-issued identification
If you’re working with a CPA firm to file your BOI report, they may already have most of the information required. However, they will need a copy of your government-issued ID to complete the submission.
Additional Information for Single-Member LLCs
Although single-member LLCs are considered “disregarded entities” by the IRS and are not required to file separate tax returns, they still fall under the BOI reporting requirement if they engage in business activities. In these cases, additional documentation, like the name of the LLC and its tax ID number, may be required.
The Risks of Non-Compliance
Failure to comply with the BOI reporting requirements could lead to significant financial and legal consequences. The penalties include:
- Daily Fines: Up to $591 per day for each day the report is late, capped at $10,000.
- Criminal Penalties: Non-compliance could result in up to two years in prison for severe cases.
These steep penalties make compliance with the BOI reporting requirements essential for all eligible entities. Given the high risks involved, it’s advisable not to delay the filing process, even if there are talks in Congress about potential modifications or delays to the requirement.
How CPA Nerds Can Assist
Filing the initial BOI report can be a straightforward process with the right support. Many CPA firms, including ours, offer assistance with preparing and submitting BOI reports on behalf of their clients. If you choose to work with us, here’s how we can assist:
- Data Collection: We’ll work with you to gather the necessary information, including your government-issued ID, and complete the form.
- Compliance and Submission: Once all required data is collected, we’ll handle the submission of the report to FinCEN.
- Ongoing Support: If you experience ownership or address changes after the initial submission, you’ll be responsible for updating FinCEN within the specified timeframe. However, we are available to provide guidance on how to handle these updates.
To engage our services for the BOI report, we will require a signed engagement letter. Our BOI filing service is available at a minimum charge of $250 per report, and we will only file for clients with an existing relationship with our firm.
For Those Who Prefer Self-Reporting
If you prefer to file the BOI report independently, FinCEN provides a portal for self-reporting at https://boiefiling.fincen.gov. Self-reporting is an option, but it’s crucial to ensure accuracy, as errors can still result in penalties.
Preparing for Future Compliance
Once the initial BOI report is filed, future compliance requires vigilance. FinCEN mandates that any changes in beneficial ownership or address be reported within a specific timeframe. While our firm will handle the initial report if requested, subsequent updates will be your responsibility. We recommend setting up reminders and keeping records of any changes to ensure timely reporting.