BOI Filing – Still a Requirement? Treasury Department Doesn’t Think So

Treasury Department Enforcement:

The requirement to file beneficial ownership information introduced under the Corporate Transparency Act (CTA) has undergone several challenges since its announcement. Although it is still technically required, the Treasury Department announced on Sunday, March 2, 2025, that it will not be enforcing any penalties or fines imposed by the CTA for failure to file beneficial ownership information against U.S. citizens, domestic reporting companies, or their beneficial owners.

The Treasury Department specified that enforcement will not be sought regarding the current filing requirements, as well as forthcoming rule changes that take effect. This refers to the upcoming deadline for filing by March 21, 2025, announced by FinCEN after the government obtained a stay of the nationwide injunction and reinstated the reporting obligation.

Enforcement under the CTA for failure to report would have led to civil penalties of up to $500 for each day the violation continues or criminal penalties, including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI report may be held accountable for the failure. Now, it appears that the Treasury Department will not be enforcing such penalties.

However, certain foreign reporting companies may still be required to file. In its press release, the Treasury Department carved out an exception to the non-enforcement. It stated that:

“the Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.”

This suggests there may be different requirements on the horizon, differentiating between U.S. and foreign reporting companies. Depending on its implementation, this carve-out may face challenges for treating entities differently based on nationality. For now, it may be safe for non-U.S. companies that are registered to do business in the United States to continue planning to report BOI information by the current deadline of March 21, 2025, or at least prepare all necessary information for filing.

Ongoing Litigation Update:

We have previously reported on litigation arising from Texas (Texas Top Cop Shop, Inc. v. Bondi and Smith v. United States Department of the Treasury) regarding nationwide injunctions of the reporting requirement. In Smith, the court reinstated the CTA reporting obligation, creating the basis for the new March 21 deadline noted above. There are no new developments in these cases yet.

However, we have not reported on another case from Alabama and how it may impact future obligations. In March 2024, the federal district court concluded in National Small Business United v. Yellen that the CTA exceeds the Constitution’s limits on Congress’s power and enjoined the Department of the Treasury and FinCEN from enforcing the CTA against the plaintiffs. Included in this group are the National Small Business Association and its members. These individuals and entities were not required to report beneficial ownership information to FinCEN per the ruling, and continue to remain an exempted class.

Reminder: To Whom Does the CTA apply (Technically):

A beneficial owner is any individual who, directly or indirectly:

• Exercises substantial control over the business; OR
• Owns or controls at least 25 percent of the ownership interests of the business.

Beneficial ownership information reporting is not an annual requirement. Unless a company needs to update or correct information, a report only needs to be submitted once.

This reporting requirement applies to U.S. corporations and LLCs, as well as other forms of businesses organized under state or Tribal law.  It also applies to foreign businesses that register to do business in the United States (often this means registering with a state).  There is a list of exemptions but most of them are entities that have to register with the government under other laws. A common exemption is that for large businesses, who must meet all three of the following to be exempt from BOI reporting requirements:

• Have more than 20 full-time domestic employees.
• Have gross domestic receipts or sales exceed $5 million.
• Have an operating presence at a physical office within the United States.

Takeaways:

The status of the BOI reporting requirement under the CTA remains controversial. Treasury Secretary Scott Bessen and President Trump endorsed the Department’s announcement that it will not enforce penalties. It appears that efforts are being made from multiple avenues to either stall or reverse this reporting requirement. For now, we encourage members to regularly check on the status of the requirements. Non-enforcement does not mean compliance obligations do not have to be met under the regulation. Therefore (and especially for foreign companies), it may be wise to prepare this information internally so that it is ready for filing once a final determination has been made.

Many businesses in the aerospace industry may be affected by this BOI reporting requirement. Enforcement for failure to report may mean onerous fees and could entail a felony charge. Ultimately, accurate record retention remains a key necessity for all businesses.