We last visited FINCEN’s Beneficial Ownership Information (BOI) reporting requirements in my article, The FINCEN Beneficial Ownership Information Reporting Deadline Might Be Extended, But Prepare To File Now Anyway (Feb. 14, 2025). That article suggested that the BOI reporting deadline would be set back to January 1, 2026, based on bipartisan legislation that passed the U.S. House of Representatives and pending in the Senate. The article further noted that FINCEN had itself stated that the BOI filing requirements would be pared back. It also gave a warning as to why reporting persons and businesses should now gather their filing information anyway, which is that the information may be difficult to obtain later.
We now rejoin the BOI fiasco still in progress.
The first news is that, as my previous article suggested, the BOI reporting requirements have effectively been put on hold. On February 27, 2025, FINCEN announced that no enforcement actions (read: fines and penalties) would take place for noncompliance with the requirements until at least the U.S. Treasury Department promulgated new guidance. This announcement was affirmed by Treasury on March 2, 2025 ― a rare Sunday evening press release. Meanwhile, the President announced on social media that enforcement had been suspended on “American businesses”.
It doesn’t require a reading of tea leaves or an accurate OUIJA board to see what is going on here. Congress has figured out that the BOI reporting requirements are overbroad and are looking to modify the Corporate Transparency Act (CTA), which demands that Treasury and FINCEN do all this stuff, so as to more narrowly define the reporting companies and persons. The Administration knows that this is going to happen and, even though Trump 1.0 supported passage of the CTA in the first place, has decided to delay BOI reporting at least long enough to see what Congress does or doesn’t do in terms of modifying the BOI requirements.
The bottom line is that, effectively, nobody is currently required to file the BOI report and likely nobody will be required to file the BOI report until Congress takes action ― or, at a minimum, until Treasury releases new guidance on the subject.
Meanwhile, there have been U.S. District Court cases that have held the CTA to be unconstitutional on some ground or another. Since these are lower-court opinions, there is no compelling reason to spend any time on them until these cases at least percolate to a decision of the U.S. Circuit Courts of Appeals. Very likely, the constitutionality of the CTA will ultimately have to be determined by the U.S. Supreme Court. Extending the BOI reporting deadline to January 1, 2026, will also allow for the issues surrounding the CTA to be significantly developed, and perhaps significantly resolved one way or the other, prior to that deadline.
It should be noted that if Congress does pare down the CTA and a new version is passed into law, this would very likely render moot (or at least seriously deflate) some of these judicial challenges. Since most of the challenges ultimately come down to whether the CTA is overbroad in its application, this also gives Congress additional incentive to cut the CTA down to size.
So what might Congress’ changes to the CTA and Treasury’s changes to its BOI reporting guidance look like? Keeping in mind that the purpose of the CTA was the very laudable purpose of combatting money laundering and related criminal activity, some of the types of entities that were required to file the BOI report never made much sense in the first place.
Take, for example, homeowner associations (HOAs). Since an HOA takes in very little cash in the first place, it would take an exceedingly brilliant criminal to figure out how to make an HOA into a money-laundering operation. Further, most states require that the annual financial statements of HOAs be audited, which would require that the auditors also be in on the money laundering scheme. This is so unlikely to happen that HOAs ― or at least those which have audited financials ― should have been excluded from the BOI reporting requirements in the first place. So, they can go.
For that matter, one must wonder why any entity which are required to have audited financial statements are included in the BOI reporting requirements. Excluding companies which have audited financial statements would substantially reduce the number of entities that are required to make the BOI filing.
Another situation where the BOI reporting requirement makes little sense is for folks who have received an IRS Form K-1 from an entity. Consider that these companies are already giving Treasury (via tax returns) nearly all the information that it needs to know about the identities of these people. In other words, for these folks the BOI reports are virtually redundant and they should be excluded as well. Likewise, companies should not be required to include in its BOI reports the identities of persons who are already receiving Form K-1s. This alone would probably eliminate upwards of 90% of the BOI reports for individuals.
The BOI reporting requirement will probably not be going away entirely, however, nor should it. The reasons for which the CTA was originally passed (again, with support of Trump 1.0) are still valid today, which are to combat money laundering, terrorist financing, and other evils which occur through shell companies. That online scam artist who cleaned out your Aunt Emma and Uncle Zach? Very likely they used a shell company’s bank account to run the scam. Ponzi schemers? They all use shell companies. Narcotic gangs, including those who sell fent and meth? Ditto.
The goal for Congress and Treasury now is to get away from their previous carpet-bombing approach that was all hay and few needles, and to instead employ something closer to a surgical strike that just ferrets out the bad actors. That is entirely doable, they now just need to get along with doing it.