Failing to File Treasury New Report? Small Businesses May Be Fined
A critical deadline looms for millions of small businesses across the United States. The Treasury new report requirement, stemming from the Corporate Transparency Act of 2021, mandates businesses to disclose detailed ownership information to the Financial Crimes Enforcement Network (FinCEN).
This legislation is designed to tackle financial crimes such as money laundering and corruption by unveiling the identities behind shell companies and opaque ownership structures. Non-compliance could lead to hefty fines and even jail time, putting the financial stability of small businesses at risk.
Understanding the Corporate Transparency Act
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Enacted to combat illicit activities, the Corporate Transparency Act requires businesses to submit Beneficial Ownership Information (BOI) by January 1, 2025. According to federal estimates, approximately 32.6 million entities—including corporations, LLCs, and other business types—fall under this requirement. The BOI report must detail the names, birth dates, addresses, and identification information of individuals who either own 25% or more of the company or have substantial control over it.
Exemptions exist for entities such as large corporations with more than $5 million in gross sales and over 20 full-time employees, along with certain banks, credit unions, and publicly traded companies. Despite these exceptions, a significant number of small businesses remain affected.
Penalties for Non-Compliance
Failing to comply with the Treasury new report regulations could lead to severe consequences:
1. Daily Civil Penalties – Businesses may incur fines of $591 per day for continued violations.
2. Criminal Fines and Imprisonment – Owners could face up to $10,000 in fines and two years of imprisonment for willful non-compliance.
Financial planner Charlie Fitzgerald emphasized the gravity of these penalties, warning, “For small businesses, these fines can be devastating, threatening their very existence.”
Current Compliance Landscape
As of December 1, 2024, only 9.5 million reports had been submitted, covering just 30% of the anticipated total filings. Despite efforts to raise awareness, many business owners remain unaware of these requirements. Federal outreach initiatives, including a BOI portal launched in January 2024, have struggled to bridge this knowledge gap.
The S-Corporation Association of America has called the national compliance situation “bleak,” noting that millions of small businesses may inadvertently become non-compliant by the 2025 deadline.
Temporary Halt on Enforcement
Adding to the uncertainty, a federal court in Texas temporarily blocked the enforcement of BOI reporting rules in early December. This injunction prevents the Treasury Department from imposing penalties while the court evaluates the constitutionality of the regulations. However, businesses are still required to file their BOI reports by the deadline, as the injunction does not change the reporting requirements themselves.
Legal experts caution that enforcement could resume if the injunction is lifted. According to Treasury officials, penalties will only apply to those who “willfully violate” the law, with leniency for those correcting errors within 90 days of the original reporting deadline.
What Businesses Should Do Now
Freepik | Businesses face $591 daily fines for not following Treasury new report regulations.
To avoid penalties, small businesses must act promptly:
1. Determine Applicability – Confirm whether your business is subject to the BOI reporting requirements.
2. Gather Required Information – Compile details about beneficial owners, including identification documents.
3. File Before the Deadline – Ensure compliance by submitting your report before January 1, 2025.
The Importance of Compliance
Treasury Secretary Janet Yellen highlighted the broader implications of the legislation, stating, “Transparency in business ownership is a powerful tool in fighting corruption, terrorism, and other crimes that exploit corporate anonymity.” By fulfilling these reporting obligations, businesses contribute to a fairer and more transparent financial system while avoiding substantial penalties.
The Treasury new report requirement represents a significant shift in how businesses are regulated, particularly small entities that may lack the resources to navigate such compliance measures. While the law’s ultimate enforcement remains uncertain, proactive steps toward adherence can protect businesses from financial and legal consequences. Staying informed and acting swiftly will ensure a smoother transition into this new era of corporate transparency.