Small Businesses Face FinCEN BOI Reporting Penalties

by Prof. Robert Bloink and Prof. William H. Byrnes

As it stands, the Corporate Transparency Act (CTA) currently remains in effect with respect to most taxpayers despite one court’s ruling that it is unconstitutional with respect to those plaintiffs. Under the CTA, nearly all entities formed or registered to conduct business in the U.S. must report beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). The law is designed to limit taxpayers’ ability to use shell companies and ownership structures that can allow money laundering and other criminal activity to take place through those entities. The reach of the CTA is incredibly broad. Most small businesses are now subject to the new rules and failure to fully comply with the CTA beneficial ownership reporting requirements can result in significant civil and criminal penalties. Now, FinCEN has recently updated its guidance to provide additional details on who is required to comply.

The CTA Mandate: Background