🏛️ What Is Beneficial Ownership Information (BOI) Reporting? Why It Matters and What’s Happening in U.S. Courts

Starting January 1, 2024, millions of businesses across the United States were required to file Beneficial Ownership Information (BOI) reports with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.

The rule, created under the Corporate Transparency Act (CTA), is one of the most significant shifts in small business compliance law in decades—and it’s now at the center of a heated legal battle.

In this post, we’ll cover:

• What the BOI reporting rule is

• Who it affects

• What information must be reported

• Why this regulation was created

• Key deadlines and penalties

• Recent litigation that may impact its enforcement

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🔍 What Is Beneficial Ownership Information (BOI) Reporting?

BOI reporting refers to a new federal requirement that certain companies must report details about their beneficial owners—the individuals who ultimately own or control the company.

The information must be submitted to FinCEN via a secure online system.

Affected companies include:

• LLCs

• Corporations

• Other entities formed or registered in the U.S.

A beneficial owner is any individual who:

• Directly or indirectly owns 25% or more of the company, or

• Exercises substantial control over the company (e.g., executives, decision-makers)

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📜 Why Was the BOI Rule Introduced?

The Corporate Transparency Act, passed in 2021 as part of the National Defense Authorization Act (NDAA), aims to combat:

• Money laundering

• Terrorist financing

• Shell company abuse

• Foreign corruption and tax evasion

Before the BOI rule, it was often difficult for law enforcement to uncover who actually controlled small and private companies. The CTA closes that gap by requiring transparency at the ownership level.

🛡️ This brings the U.S. in line with global anti-money laundering (AML) standards established by the Financial Action Task Force (FATF).

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🏢 Who Must File a BOI Report?

Most small businesses formed in or registered to do business in the U.S. are required to report. This includes:

• LLCs

• Corporations

• Limited partnerships

• Business trusts (in some cases)

Exceptions:

There are 23 categories of exempt entities, including:

• Large operating companies (20+ employees and $5M+ in revenue)

• Publicly traded companies

• Banks and credit unions

• Tax-exempt nonprofits

• Insurance companies

• Accounting firms

🔍 Most small LLCs and startups do not qualify for exemptions and must file.

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🧾 What Information Must Be Reported?

Each company must provide:

📌 Company Information:

• Legal name

• Trade name (DBA)

• Current U.S. address

• EIN (Employer Identification Number)

• Jurisdiction of formation

👤 Beneficial Owner(s) Information:

• Full legal name

• Date of birth

• Residential address

• Unique identifying number (from a passport, driver’s license, etc.)

• Upload of document used for ID

🧠 If a company is created or registered after January 1, 2024, it must also report company applicants—the individuals who filed or directed the formation.

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🗓️ Key Deadlines

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⚠️ Penalties for Non-Compliance

Failing to file, or knowingly submitting false information, can result in:

• $500 per day in civil penalties (up to $10,000)

• Criminal fines

• Imprisonment for up to 2 years

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⚖️ The Legal Challenge: National Small Business United v. Yellen

In March 2024, a federal district court in Alabama ruled that the Corporate Transparency Act is unconstitutional in the case National Small Business United v. Yellen.

🧑‍⚖️ What the Case Says:

• The plaintiffs argue that the CTA exceeds Congress’s powers under the Constitution.

• The court agreed, stating that the federal government cannot compel this level of private information from entities that do not engage in interstate commerce or financial transactions with the government.

📍 Who Does the Ruling Apply To?

• The ruling currently applies only to the plaintiffs in that case, not all businesses nationwide.

• FinCEN has stated that it will continue to enforce the BOI rule for all other entities not named in the suit.

🔄 What Happens Next?

• The U.S. Department of Justice has filed an appeal.

• The case is expected to move through the 11th Circuit Court of Appeals, and possibly the Supreme Court.

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💼 What Should Businesses Do Right Now?

Despite the ongoing litigation, the BOI rule remains in effect for nearly all entities. Unless you’re part of the plaintiff group in the Alabama case:

✅ You must comply with BOI filing deadlines
✅ You should monitor updates from FinCEN and Complycove
✅ You should file updates within 30 days of any ownership or control change

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🛠️ How Complycove Can Help with BOI Filing

At Complycove, we simplify the complex world of regulatory filings. Whether you’re launching a new business or maintaining compliance, we can help with:

✅ BOI report filing with FinCEN
✅ Beneficial owner tracking & updates
✅ Company applicant documentation
✅ Exemption verification
✅ Compliance monitoring
✅ Multi-entity management

📌 Don’t wait until it’s too late—penalties for noncompliance are real and substantial.

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📞 Need Help Filing Your BOI Report?

The Corporate Transparency Act is still the law for nearly all businesses. Don’t risk fines, delays, or legal uncertainty.

👉 Contact Complycove Today:
📧 info@complycove.com
🌐 www.complycove.com

“Transparency is the future of business law. Let Complycove help you navigate it with confidence.”