The Treasury's small business ownership rule is being held in limbo as the court examines its constitutionality.

• The Treasury Department required small businesses to report "beneficial ownership information" by Jan. 13, 2025, or face financial penalties.
• An order was issued by the 5th U.S. Circuit Court of Appeals on Dec. 26, halting the enforcement of a previous delay from Jan. 1.
• Businesses are not obligated to submit a BOI report and will not be held liable while the order remains in effect.
• One legal expert stated that the current situation will likely continue until at least March.

The Treasury Department deadline for small businesses to report "beneficial ownership information" has been delayed again due to a court order suspending enforcement.

The Treasury stated that the regulation aimed to prevent criminals from concealing illegal activities through shell companies or complex ownership structures by requiring small businesses to reveal the identities of their direct or indirect owners.

The 5th U.S. Circuit Court of Appeals issued an order on Dec. 26 that temporarily stopped the implementation of the Corporate Transparency Act's BOI reporting requirement while the court evaluates the parties' substantial arguments regarding its constitutionality.

The new deadline, which had been Jan. 13, is now unclear.

Daniel Stipano, a partner at law firm Davis Polk & Wardwell, wrote in an email that the case is calendared for oral argument en banc on March 25, 2025, and while it is not known how long the injunction will remain in effect, we expect that it will be effective at least through March.

Currently, businesses are not obligated to submit BOI reports to FinCEN, which is a department within the Treasury.

Businesses don't face liability for the time being

FinCEN stated on its website on Friday that businesses are not liable if they do not submit BOI reports as long as the order remains in effect.

Those who did not adhere to the reporting guidelines could face civil penalties of up to $591 per day, as well as criminal fines of up to $10,000 and imprisonment for up to two years.

Those with cash accounts benefit from 'higher for longer' interest rates. Credit card debt is set to hit a record level. Only 21% of workers take advantage of Roth 401(k) savings.

According to federal estimates, approximately 32.6 million businesses, including corporations, limited liability companies, and others, are subject to the rule. However, many businesses are exempt from the requirement, such as those with more than $5 million in gross sales and more than 20 full-time employees.

FinCEN stated that companies may still choose to submit beneficial ownership information reports on a voluntary basis.

Whiplash for small businesses

The delay represents a bit of legal whiplash for small business owners.

A federal court in Texas temporarily halted the Treasury from enforcing BOI reporting rules, which were scheduled to be implemented on Jan. 1, 2025.

On Dec. 23, a motions panel of the 5th Circuit lifted an enforcement injunction after an appeal from the federal government. However, on Dec. 26, a different panel of the same appeals court – the merits panel – put the injunction back into place.

Stipano explained in an email that no one needs to file a BOI Report unless and until the injunction is lifted.