Understanding the Latest BOIR Update
The U.S. Department of the Treasury has announced a suspension of enforcement actions related to the Beneficial Ownership Information Reporting (BOIR) requirements under the Corporate Transparency Act (CTA). This change impacts many U.S. businesses that were previously required to comply with new FinCEN reporting requirements.
Read the official Treasury announcement here.
What is the Corporate Transparency Act?
The Corporate Transparency Act (CTA) was introduced to combat illicit activities such as money laundering and tax evasion by requiring companies to disclose their beneficial ownership information (BOI). Under this law, businesses were mandated to submit details about their owners to the Financial Crimes Enforcement Network (FinCEN).
Key BOIR Requirements Before the Suspension:
- Mandatory Reporting: Businesses with fewer than 20 employees had to report their beneficial owners.
- Data Submission: Companies had to provide names, addresses, and identification details of their owners.
- Compliance Deadlines: Entities created after January 1, 2024, had 90 days to file reports, while existing businesses had until January 1, 2025.
What Does the BOIR Suspension Mean for Businesses?
The recent Treasury decision effectively pauses enforcement actions for U.S. citizens and domestic reporting companies. This means businesses no longer face immediate penalties for failing to submit BOIR filings by the previous deadlines.
BOIR Filing Deadlines and Compliance Uncertainty
Although the enforcement of BOIR compliance is on hold, businesses should stay updated on potential regulatory changes. Here’s what you need to know:
- No immediate penalties: Companies will not face fines or legal action for delayed BOI reporting.
- Future updates expected: The Treasury may provide further guidance or revised deadlines.
- International businesses still affected: The suspension applies primarily to U.S.-based companies.
Why the BOIR is Controversial
While the BOIR was intended to increase transparency and prevent financial crimes, many believe it overreaches into personal privacy and adds unnecessary burdens to small business owners.
The BOIR is an Invasion of Privacy
We believe that the BOIR is an invasion of privacy and that this regulation went too far. Many people use LLCs to privately own assets such as real estate, investment accounts, vehicles, planes, and boats. Forcing individuals to disclose personal ownership details to the government creates serious privacy concerns.
The BOIR is Redundant and Overly Burdensome
For income-generating businesses, the Treasury already has ownership information from tax filings. The requirement to submit duplicate reports only adds red tape and compliance costs without providing any additional security benefits. Instead of streamlining regulations, BOIR adds an unnecessary administrative burden on small business owners who are already navigating complex legal and tax requirements.
What Should Businesses Do Next?
Despite the pause in enforcement, businesses should remain prepared by:
- Reviewing BOIR Exemptions – Certain entities, such as large operating companies, are already exempt.
- Staying Informed – Monitor FinCEN updates for any policy changes.
- Preparing for Future Compliance – If enforcement resumes, businesses should be ready to file reports promptly.
Penalties for Non-Compliance (If Enforcement Resumes)
If FinCEN resumes enforcement, businesses that fail to comply with BOIR regulations could face:
- Fines up to $500 per day for late filings.
- Criminal charges, including potential imprisonment.
- Increased scrutiny from federal regulatory agencies.
Final Thoughts: BOIR Needs Reform
While the Treasury has suspended enforcement, BOIR compliance remains an important issue for businesses. However, we strongly believe that this regulation needs to be significantly revised or repealed to better balance transparency with privacy rights.
Instead of creating redundant reporting requirements, regulators should focus on leveraging existing tax filings and databases to achieve their goals without infringing on individual privacy or increasing bureaucracy.
For more details on this update, refer to the official Treasury announcement here.
