Most small businesses in the US must now report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCen), or face noncompliance penalties. Those who have an ownership interest in, or control over, such companies should take care before rushing to file the mandatory BOI report, however, for the following reasons:
Uncertain Fate of the CTA
The Corporate Transparency Act—the law that mandates BOI reporting—was recently declared unconstitutional by a federal district court in Alabama. While the ruling is specific to the plaintiffs in that matter and is NOT a binding precedent for another district, it may lead to more litigation in other districts.
As a reminder, companies formed before 1/1/2024 have until the end of the year to file their initial report. Companies formed on or after 1/1/2024 have only a 90-day window to file. Be mindful of these deadlines and consult with your legal counsel if you have concerns about filing.
BOI Reporting Scams
Scammers have already found ways to take advantage of small business owners by fraudulently soliciting the filing of BOI reports via email. As with any email, exercise caution before clicking links or providing sensitive information. FinCEN will not send unsolicited emails to companies, and reports should only be filed on FinCEN’s website (https://www.fincen.gov/boi) or via an approved third-party vendor. Here is an example of what a fraudulent document looks like.
Please consult your advisor with any questions.
