Are There BOI Reporting Penalties? Common Mistakes & How to Avoid Them
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This is a quick guide providing you high-level overview of the FinCEN BOI reporting requirements and deadlines, including the most recent updates of the court cases.
Corporate Transparency Act went into effect January 1, 2024 and since then various cases have been filed to different federal courts. The most recent two Texas district courts issued preliminary injunctions have caused chaos and confusion in the requirements of FinCEN BOI reporting.
It is more critical now than ever for businesses to pay attention to FinCEN BOI reporting deadlines as the injunction may be lifted at any time. Here is what you need to know to handle the chaos of FinCEN BOI reporting with confidence.
Understanding the deadlines for submitting BOI reports is vital for maintaining compliance. The Corporate Transparency Act (CTA) originally set strict filing deadlines for businesses, depending on when they were created or registered or formed. These deadlines were designed to make sure that businesses provide their beneficial ownership information within a reasonable time frame. Here's an overview of the initial deadlines:
These deadlines were intended to streamline the disclosure process and assist regulatory authorities in effectively tracking beneficial ownership. These deadlines are currently on hold due to legal issues surrounding the implementation of the Corporate Transparency Act.
A Texas federal court issued a nationwide preliminary injunction halting enforcement of the CTA’s reporting requirements, including BOI disclosures in December 2024. Although the U.S. Supreme Court has lifted this specific injunction. Another Texas federal court issued a separate nationwide preliminary injunction on January 7, 2025. This ongoing litigation has caused confusion to many reporting companies in completing their FinCEN BOI reporting.
Rerporting companies are not required to file FinCEN BOI reports at this time. Various cases are being appealed to the higher courts. There are hearings scheduled up to March 2025. Companies need to be alert and keep up with the status of the FinCEN BOI reporting requirements. The preliminary injunction can be lifted by higher courts at any time. Companies need to be alert and keep up with any court cases that can have an impact on their reporting requirements.
Here’s a brief timeline of recent CTA developments:
Reporting companies should keep a close eye on developments because injunction can be lifted at any time.
While filings are not mandatory at this time, preparation is key. Here’s how businesses can stay ready:
Collect all necessary basic information about each of your business entities, including the business entity’s ownership interests and the management information. You should also gather the information of the individuals who exercises substantial control over the company and the manager(s), officer(s), and any other individuals who have substantial control of the business creation or registration entity. These requirements are all outlined in the compliance guide issued by FinCEN.
It’s still important to be prepared while the injunction is in place for the possibility that the FinCEN BOIR requirements could resume at any time. The last thing you want is to be caught off-guard and unprepared for filing if the injunction is lifted.
d keep up with the status of the FinCEN BOI reporting requirements. The preliminary injunction can be lifted by higher courts at any time. Companies need to be alert and keep up with any court cases that can have an impact on their reporting requirements.
Choose a solution that allows you to prepare filings with minimal or no upfront charges, only charging the full price if and when you file. Avoid services pushing unnecessary filings without disclosing that FinCEN BOIR isn’t currently mandatory. Stay prepared to act quickly without wasting money!
The biggest mistake would be not preparing for original filing deadline. The preliminary injunction can be lifted at any time, and there is no guarantee that FinCEN will extend the filing deadline.
Failure to fulfill BOI report deadlines can have major consequences for organizations. Noncompliance can result in severe monetary and criminal penalties.
Organizations that fail to submit FinCEN BOI reports on time could face fines of up to $591 per day, along with potential criminal charges up to 2 years in jail. These penalties are being imposed on individuals who have control over the business entities, such as managers, owners, officers, and any other individuals with substantial control over the entities.
Companies’ ensuring compliance with FinCEN BOI reporting requirements will not only protect the reporting companies, their financial gain, but most importantly, their people.
FinCEN BOIR requires accuracy in filing who are the beneficial owners of each entity. This requires interpretation of the Corporation Transparency Act and FinCEN’s compliance guides.
Applying such law to the ownership and management structure of the entity to determine who holds beneficial ownership information is a legal process. Unless the entity only has one individual as the owner and there is no manager or officer, anything more complicated than this simple structure should involve a lawyer to determine the BOI.
Involving lawyers to determine BOI can reduce the risk of inaccuracies. If errors occur in the filing, the responsibility falls on the lawyers handling the process.
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Your lawyers can also keep you up to date as to the current status of all the cases and the FinCEN BOI reporting requirements and deadlines.
Most firms offering BOI reporting assistance are not law firms and only facilitate the filing process. The key in this process is the analysis and determination of who are the beneficial owners. That is a process that lawyers can do.
That's where platforms like SeedJura.CO is important. We are lawyers and developed and offered our solution, SeedJura.CO, via our law firm. SeedJura.CO is a tech platform that analyzes and determines beneficial owners automatically and files with FinCEN directly via authorized API. It is a one-stop solution for organizing companies’ entities and FinCEN BOI reporting. Below is SeedJura.CO’s pricing:
Businesses can choose to file voluntarily now or wait for the injunction to be lifted. With SeedJura.CO, if businesses determine to file now voluntarily and later on the CTA is being “canceled” by the U.S. Supreme Court or the federal government, SeedJura.CO will return their payments on SeedJura.CO FinCEN BOIR Servicing Fees minus any third-party processing fees. This will ensure business in compliance without the risks of unnecessary expenses.
Maintaining compliance with the FinCEN BOI reporting requirements under the Corporate Transparency Act is critical for reporting companies operating in the United States. Reporting Companies formed in the U.S. can make sure they satisfy the FinCEN BOIR requirements by: (1) gathering the necessary information for their entities and beneficial owners, (2) selecting the suitable reporting solution backed by lawyers, and (3) being updated about the evolving legal situation and requirements.
While BOI reporting requirements are currently paused, now is the perfect time to get prepared. Don’t risk falling behind if the injunction is ever lifted. Visit SeedJura.com and sign up today for SeedJura.CO to start preparing. Or you can contact us at SeedJura.com for legal guidance on how to gather your information, navigate the complexities of the Corporate Transparency Act, and ensure your business is ready to meet compliance requirements if the injunction is lifted.
Ready to take action? Sign-up today or contact us via SeedJura.com and stay ahead of the legal changes that could impact your business. Frequently Asked Questions
The Corporate Transparency Act mandates the BOI report to combat money laundering, terrorism financing, and illegal financial transactions while fostering transparency. In reports file with the Financial Crimes Enforcement Network, reporting companies are required to provide information regarding the beneficial owners of each entity that the reporting companies created or formed.
Entities formed or registered in any state in the U.S. are also required to report and by the CTA to file FinCEN BOI reports, including partnerships, corporations, and limited liability companies (LLCs).
There are 23 exceptions such as publicly traded corporations, tax-exempt organizations, and generally, organizations that have already been filed with the federal government or are subject to strict federal or state regulations. These exemptions are complicated and should be interpreted by lawyers.
The U.S. Supreme Court lifted the nationwide injunction on January 23, 2025 which injunction was issued by a Texas district court on December 3, 2024. However, FinCEN currently is not requiring businesses to file FinCEN Beneficial Ownership Information (BOI) reports because of a separate nationwide injunction issued by a federal judge in a different Texas district court on January 7, 2025.
As such, businesses need to stay informed about the FinCEN BOI reporting requirements. The legal cases on Corporate Transparency Act are evolving which may affect businesses’ compliance obligations.
Businesses should be prepared to act swiftly should the injunction be lifted.
Failing to submit FinCEN Beneficial Ownership Information (BOI) reports if the injunction is lifted could lead to hefty penalties. Penalties can include fines and criminal penalties up to 2 years in jail which will be imposed on individuals who are owners, managers, officers, and have substantial control over the entities.
Contact us to learn more about what SOW Platform can do for you and your business.
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