Should BOI Deadline Be Delayed?

Under the Corporate Transparency Act (CTA), FinCEN has recently created new beneficial ownership reporting obligations that apply to all domestic reporting companies (including corporations, LLCs, limited partnerships and any entity formed by filing a document with a secretary of state in the U.S). The company's beneficial owners must be identified and reported to FinCEN (the reporting deadline is January 1, 2025 for business entities formed before January 1, 2024; companies formed during 2024 have 90 days to report and companies formed in 2025 and beyond have 30 days). The company must report the entity's (1) legal name, (2) any trade names or dba names, (3) principal place of business, (4) state of formation and (5) unique taxpayer ID number. For each beneficial owner, the company must disclose (1) full legal name, (2) date of birth, (3) address, (4) identifying number from the individual's ID (driver's license or passport) and (5) a copy of the ID used.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about whether the new beneficial ownership reporting obligations should be delayed.

Below is a summary of the debate that ensued between the two professors.

Their Votes:





Their Reasons:

Byrnes: The deadline for complying with the new FinCEN reporting obligations is right around the corner for most existing businesses. Many of the smallest business owners have never even heard of this new obligation. Moreover, the validity of the CTA in general has been challenged. These reporting obligations should not become effective until we have full clarity as to the government’s authority to impose such broad and sweeping information collection rules.

Bloink: American business owners have already had an extensive amount of time to become familiar with their reporting obligations. These BOI reporting obligations are extremely important when it comes to preventing the wealthiest Americans from hiding assets through the use of shell corporations. FinCEN needs this basic information in order to execute its duties and prevent criminal activity conducted through business structures—and there’s no reason for a delay.

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Byrnes: Without a delay and an increase in the education and awareness programs related to this new requirement, millions of American businesses will be out of compliance without even knowing that they now have a new reporting obligation in the first place. Some new business owners have a mere 30-day window to report their beneficial ownership information. That’s not nearly sufficient time to understand their obligations and comply.

Bloink: FinCEN has published extensive FAQs designed to give American business owners the information they need to comply with the BOI reporting obligations. We can't continue to point to "lack of knowledge" as a reason to deprive FinCEN of the important information it needs to prevent money laundering and other financial crimes.

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Byrnes: Even those business owners who know that the reporting obligation exists have been hesitant to report because of a general lack of clarity when it comes to their obligations--including legal challenges to the validity of the new rule. The law continues to face legal challenges, and reporting obligations are not justifiable given the lack of clarity as to the government’s authority.

Bloink: As in most situations, we have to weigh the benefits against the burdens with respect to the new BOI reporting obligations. We’re asking business owners to provide extremely basic information about the actual human person behind the business structure. That’s not so onerous as to justify a delay, especially given the year-long ramp up to the full effectiveness of the CTA mandate.