BOI Reporting Suspended Again – Is It for Good This Time?
The Treasury Department made a surprise announcement on March 2nd, saying that Beneficial Ownership Information (or BOI) reporting under the Corporate Transparency Act was being suspended for most businesses operating in the US, and this time it's for good, so they say.
BOI reporting is an anti-money laundering effort that, while long on good intentions, was in the belief of many, short on common sense. Opponents argued that the burden it was placing on small and medium-size businesses, the privacy concerns and then the confusion about deadlines and enforcement caused by a string of legal battles occurring in multiple courts throughout the land did not justify the potential benefits. And, for a time, enforcement was postponed due to multiple court injunctions.
All of this came to a head the last few days of February when on February 17 the last injunction was “stayed” by the courts, paving the way for enforcement of BOI reporting to begin. Indeed, Treasury announced a few days later a new BOI reporting deadline of March 21. Literally within days of this announcement, due to mounting public outcries, Treasury backtracked and said the March 21 deadline would not take effect, and more guidance would be coming soon, but no later than March 21.
That leads us to the announcement of Sunday, March 2nd, when Treasury declared, “not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either.”
Further, Treasury said, it will “be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Treasury takes this step in the interest of supporting
hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.”
Quoting U.S. Secretary of the Treasury Scott Bessent, “This is a victory for common sense. Today's action is part of President Trump's bold agenda to unleash American prosperity by reining in burdensome regulations, in particular for small businesses that are the backbone of the American economy.”
There you have it. Good news for many of the estimated 32 million businesses with a BOI reporting requirement that if not met faced a potential penalty of $606 a day, up to $10,000, and two years in prison with similarly serious penalties for unauthorized disclosure. Of course, many affected entities had already filed the previously mandatory BOI reports, but it would appear that this, at least, relieves even them of the further requirement to file BOI updates every time there is a change in ownership information.
A word of caution here. Keep in mind that short of legislative action to repeal BOI reporting, all of this could change in the future. Treasury at the moment has made this decision not to “enforce” what is still law. A change of heart in the future (e.g., a change in administration) could set it all in motion once again.
