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Janet Yellen, US Treasury Secretary, during a tour of the Financial Crimes Enforcement Network (FinCEN) in Vienna, Virginia, on January 8, 2024.
Valerie Plesch/Bloomberg via Getty Images
An upcoming Treasury Department deadline for millions of small businesses to comply with a new reporting requirement on “beneficial ownership information” was postponed again, following a court order suspending implementation.
The regulation, which requires small businesses to reveal the identities of people who directly or indirectly control a company, is aimed at preventing criminals from concealing illegal activities carried out through shell companies or opaque ownership structures, the Treasury Department said .
The 5th U.S. Circuit Court of Appeals late on Dec. 26 issued an order halting enforcement while the court “considered the parties’ weighty substantive arguments” on the constitutionality of the Corporate Transparency Act, which imposed the BOI reporting requirement. life, the order said.
The new deadline, which had been January 13, is now unclear.
“While it is unknown how long the order will remain in effect, the matter has been scheduled for oral arguments and sofa on March 25, 2025, so we expect the order to be in effect at least through March,” Daniel Stipano, partner at law firm Davis Polk & Wardwell, wrote in an email.
In the meantime, companies are not required to file BOI reports with the Financial Crimes Enforcement Network, known as FinCEN, which is part of the Treasury Department.
Companies are not liable for the time being
Small business whiplash
The delay means a bit of legal whiplash for small business owners.
On December 3, a federal court in Texas temporarily blocked the Treasury Department from enforcing the BOI reporting rules, which at the time were set to take effect on January 1, 2025.
Then, on December 23, a 5th Circuit motions panel vacated that enforcement order, following an appeal from the federal government. On December 26, another panel of that same appeals court – the merits panel – reinstated the order.
“The bottom line is that no one is required to file a BOI report – unless and until the order is lifted,” Stipano explained in an email.