30% of Small Businesses Have Filed Beneficial Ownership Information Reports
As of Dec. 1, one month before the Jan. 1 deadline, about 30% of small businesses reported beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN).
About 9.5 million reports were filed at that point and 1 million new reports were being filed each week, CNBC reported Monday (Dec. 9), citing FinCEN data supplied by the office of Rep. French Hill of Arkansas.
About 32.6 million businesses are required to submit an initial beneficial ownership information report by Jan. 1, according to the report.
This new reporting requirement was created by the Corporate Transparency Act passed in 2021, the report said.
Businesses and owners that don’t file may face civil penalties of up to $591 per day, up to $10,000 in criminal fines and up to two years in prison, per the report.
While a federal court in Texas temporarily blocked enforcement of the reporting rules, the deadline itself hasn’t changed, so businesses should still file the information, Erica Hanichak, government affairs director at the Financial Accountability and Corporate Transparency Coalition, said in the report.
Concerns exist that many businesses are unaware of the beneficial ownership information reporting rule, PYMNTS reported Nov. 15.
In addition, many small business owners accustomed to minimal regulatory filings may think the level of disclosure required by the rule is invasive.
However, FinCEN said in its FAQ on the subject that the database will remain confidential and accessible only to authorized authorities like law enforcement and federal agencies.
Several House members expressed concern in June 2023 that FinCEN had not laid out a clear plan for educating small businesses about the beneficial ownership information reporting requirements at that point.
In a June 7, 2023, letter to the heads of FinCEN and the Treasury Department, House members, including House Financial Services Committee Chairman Patrick McHenry of North Carolina, said this lack of clarity could lead to small businesses being held civilly or criminally liable for noncompliance.
“Specifically, we believe that press releases are insufficient to ensure that the approximately 32.6 million small businesses that will be expected to comply in 2024 understand their upcoming responsibilities,” the letter said.
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