The Financial Crimes Enforcement Network (FinCEN) signaled possible changes to the beneficial ownership (BOI) reporting requirements, contingent on a federal district court lifting an injunction that currently blocks enforcement, Journal of Accountancy reported.
In a court filing on Feb. 5, the Treasury Department, which the FinCEN is under, stated that FinCEN would grant a 30-day filing extension if the stay is approved, while also evaluating modifications to ease the burden on low-risk entities and focus enforcement on those posing the most significant national security risks.
The Department of Justice (DOJ) submitted the request to the Eastern District of Texas, asking it to lift its nationwide injunction in the case of Samantha Smith and Robert Means v. U.S. Department of the Treasury. The filing references the Supreme Court’s recent decision to stay a separate injunction in Texas Top Cop Shop, Inc. v. Garland, arguing that the same reasoning should apply. Alternatively, the DOJ asked for the injunction to be limited to only the named plaintiffs in the Smith case.
In a recent update, the FinCEN said, "If the district court’s order is stayed, thereby allowing FinCEN’s Reporting Rule to come back into effect, FinCEN intends to extend the reporting deadline for all reporting companies 30 days from the date the stay is granted. Further, in keeping with Treasury’s commitment to reducing regulatory burden on businesses, FinCEN, during that 30-day period, will assess its options to modify further deadlines or reporting requirements for lower-risk entities, including many U.S. small businesses, while prioritizing reporting for those entities that pose the most significant national security risks."
According to the update, for the time being, FinCEN is complying with—and will continue to comply with—the district court’s order for as long it is effective. Because of this, the FinCEN is not enforcing the CTA against the plaintiffs in that action—Samantha Smith and Robert Means—and their related entities, and FinCEN is also not currently enforcing 31 C.F.R. § 1010.380 requirements against any individual or entity.
Reporting firms are, thus, not required to file BOI with FinCEN and they may continue to voluntarily submit BOI reports, free of charge, utilizing the agency’s e-filing system, the update said.
On LinkedIn, AICPA Vice President of Tax Policy & Advocacy Melanie Lauridsen welcomed the potential extension but emphasized that 30 days may not be sufficient given widespread confusion around the BOI reporting requirements. The AICPA continues to advocate for a longer delay to ensure businesses and tax professionals have enough time to comply.
In a separate article, Journal of Accountancy reported that despite the different legal challenges to the reporting rules for BOI causing its non-implementation, inflation adjustments are once again increasing the civil monetary penalties for violating those rules.
The Journal said that, effective Jan. 17,.the penalties for BOI reporting violations as well as for the the unauthorized disclosure or use of BOI rose to $606 a day compared to $591. The original fine was for $500.