If you’re one of more than 30 million businesses that under the law are now required to file beneficial ownership information with the federal Financial Crimes Enforcement Network (FinCEN), you probably don’t know it, you probably don’t know what’s required of you, and you probably don’t know the penalties for not doing what’s required.
For millions of businesses there are two likely possible near-term outcomes: they’ll be told that ignorance of the law is no excuse, or the government will be compelled to modify its BOI reporting timeline because it’s put businesses in an untenable position by creating a requirement and not being effective in letting businesses know what’s expected of them.
BOI is described by FinCEN as “identifying information” about individuals who directly or indirectly own or control a company. The new BOI disclosure stems from the Corporate Transparency Act, passed in 2021 by Congress.
“This law creates a new beneficial ownership information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures,” FinCEN says on its website page on BOI reporting.
On FinCEN’s BOI Frequently Asked Questions page there are hundreds of questions and answers on this subject, many of them dealing with complex issues.
Rule makers within the bureaucratic structure may sometimes take years to finalize lengthy, complicated and intricate rules, then issue to businesses deadlines to which they must conform regardless of the cost in time and money. If they fail to meet that schedule, they’re threatened with fines or even loss of freedom.
At times, spurred by business or public outcry, regulatory authorities will change their timelines. But in BOI’s case, that isn’t in the cards at the moment, as reported on Aug. 6 in the online publication of the Journal of Accountancy:
“Despite the concerns, [Secretary of the Treasury Janet] Yellen said FinCEN, which reports to Treasury, will not extend the BOI reporting deadline.
"We've seen a good response so far and don't think it's going to be necessary to extend the time frame," she said.
The article said that willful violations are punishable by fines up to $591 per day up to $10,000, and two years in prison.
That’s not to say that BOI disclosure isn’t worthwhile or necessary. In the internationally connected modern world, government has a responsibility to guard against deception and criminality. Unfortunately, the reporting guardrails result in costs and problems for millions of Americans who will never violate the law.
The reporting timeline is as follows, from FinCEN’s Beneficial Ownership Information Reference Guide:
This article first appeared in Knox News.