Over the past couple of years, businesses have been in limbo when it comes to filing their business ownership information with the federal government. Their owners have watched as courts flip-flopped over the constitutionality of requiring businesses to share their ownership information with the government.
This weekend, the U.S. Treasury Department announced a final verdict for businesses that should give some relief for those who were waiting to file.
In its announcement, the Treasury Department declared that it would not enforce any fines or punishments listed in the law for any U.S. citizen or domestic-based companies. Instead, the agency will be engaging in a rulemaking initiative to narrow the scope to foreign-reporting companies.
That means the vast majority of small businesses do not have to file their BOI paperwork, but for the 25,000 or so foreign-reporting companies registered in Florida, you still are on the hook.
The attorneys at The Orlando Law Group can help businesses determine if they are required to file their Beneficial Ownership Information and file all the required documents for you.
What is the Beneficial Ownership Information?
As a recap of the issue, privately owned small businesses, for the most part, do not have to file any sort of public disclosures in the way that companies listed on a stock exchange must do every quarter.
Unfortunately, too many criminals are using fake companies for money laundering and other crimes. It is very difficult to track criminal activity without a subpoena.
That is why, in 2021, the federal government passed the Corporate Transparency Act, hoping to provide more tools for law enforcement to find terrorists, money laundering, counterfeiting and more.
Yes, just like how we take off our shoes at the airport because of an act of terrorism, law-abiding small businesses were going to be required to file additional information with the government because of criminals.
Who was required to file Beneficial Ownership Information?
In the Corporate Transparency Act, small businesses with fewer than 20 employees and annual revenues of less than $5 million were required to file. Yes, there were some exemptions like companies in the investment and financial realms. Most organizations that file as a 501(c) with the IRS were exempt. And large businesses were exempt.
For businesses with one LLC, the issue wasn’t very problematic, but for businesses that have multiple LLCs, such as a real estate firm that owns multiple properties or a restaurant group with each location a separate entity, this could have meant filing a separate Beneficial Ownership Information for each one!
What happened if a business did not report its Beneficial Ownership Information?
Remember from our first article on this issue, the penalties for not filing were harsh. According to the federal government:
“The willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may result in a civil or criminal penalties, including civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI report may be held accountable for that failure.”
This was not like filing with the State of Florida, where the fine is relatively small for not filing. This was an effort of the Financial Crimes Enforcement Network division of the United States Treasury. It was scary.
What Happens Now?
It is not unexpected that the Trump Administration was going to eliminate the need for small businesses to file their BOI information. After all, one of the key aspects of their campaign was to eliminate regulations on businesses.
So, if your LLCs are based in the United States, the law still says you need to file, but there is no repercussion for not doing so. As such, we are recommending our clients to not take any action.
If you are a foreign-reporting company, you will still be waiting for the Treasury Department to make its final rule, but you should be prepared to act sometime in 2025 or 2026, as it appears once rulemaking is finished, you will be required to submit your BOI.
That means, if you are using the Cayman Islands or some other location as a headquarters for tax advantages or are just an office of a foreign-based company, you will probably need to file at some point.
We say “some point” because rulemaking is a process that takes a long time, often longer than a year. In the process, the agency will ask for comments and possibly hold public hearings, looking for thoughts on how it should adjust or implement a proposed rule.
This does give an opportunity for business owners who are affected to share why they shouldn’t be required to file. While you may not think the agency will listen, they often do.
The attorneys at The Orlando Law Group can help your businesses prepare for this requirement as we understand business and represent clients in business law and more in Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout Central Florida.
If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation to discuss your case. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.
Last Updated on March 3, 2025 by The Orlando Law Group
