Main Street Business

#567 BOI Is Officially Dead!

• Mark J Kohler and Mat Sorensen

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BOI Reporting Fines Canceled for U.S. Citizens & Businesses! 

Big news for U.S. business owners! The Treasury Department has announced that U.S. citizens and domestic businesses will not face fines or penalties for failing to file Beneficial Ownership Information (BOI) reports after new deadlines are set.

Last week, FinCEN confirmed that updated BOI reporting deadlines will be announced no later than March 21. However, Treasury has now clarified that they will not enforce penalties or fines associated with the BOI!

This decision comes as part of the Corporate Transparency Act (CTA) and is being positioned as a win for reducing regulatory burdens on small businesses. Treasury Secretary Scott Bessent stated that this move aligns with President Trump's goal of fostering economic growth by cutting unnecessary red tape.

What does this mean for you?

No fines or penalties for U.S. businesses and beneficial owners.
A significant shift in compliance obligations under the CTA.
Stay tuned for more updates as the final rule changes are announced!

Need Help Setting Up An LLC? Please check out my law firm here: https://kkoslawyers.com/

Speaker 1:

Welcome everyone to the Main Street Business Podcast. This is Matt Sorensen. We have a really important update for those of you with LLCs and corporations this BOI requirement we've been tracking. I wanted to make sure I gave you the update on it. Please enjoy this recording of my latest update and what you need to know about for BOIs for your LLC and corporation. All right, the BOI report is officially dead.

Speaker 1:

The US Treasury announced yesterday with the press release saying the Corporate Transparency Act, which requires LLC owners and corporations to file this BOI report, will not be enforced. The Treasury Department said we will not enforce it. We will not assess penalties, we will not assess fines. You do not have to file it. Later, trump came out on his social true social and said the BOI requirement is burdensome on small businesses. It was a bad idea. He referenced it being the Biden rule. We're going to come back to that here in a second. It's important. And then he said we are actually going to limit the scope of this Now. Right now, the Treasury Department and this is as of yesterday, march 2nd has said we are limiting the scope of this. So the law was passed.

Speaker 1:

Congress passed this law, the Corporate Transparency Act that says anyone that owns an LLC or corporation must make a filing to the federal government saying who owns 25% or more or who has substantial control. They had this online filing system at FinCENgov where you had to go, file this and register it. It's a brand new thing. You never had to do this with LLCs and corporations until last year. Now that has been ruled unconstitutional, ruled constitutional.

Speaker 1:

The courts have been battling with it and no one knew where Trump was going to land on this. He had not commented on this, nor had the Treasury Department, nor had the treasury department. Well, two weeks ago the last court order was removed and you had to now file this BOI report. So even we went out and said there's no more left. The U S Supreme court has said it's valid for now. They're still considering it. There's still a case at the U? S Supreme court. We're going to come back to that. That's important. But they've said until that case is decided, you've got to file.

Speaker 1:

And then Trump's treasury, just two weeks ago, came out and said your new deadline is March 21st. We're going to give you another 30 days. And to me I thought, well dang, the Trump administration is going to let this go. I thought there was a chance that they would say we're actually not going to enforce this. Well, they came back two weeks later, yesterday, sunday, march 2nd, and said actually we're not enforcing it, don't worry about March 21st, you don't even need to file, we're not going to enforce it. Now here's what they said they're going to do. They said they're going to go into final rulemaking and what they want to do is limit the scope of the Corporate Transparency Act and only require foreign companies to have to report this Any US-based companies, domestic-based companies doing business establishing in the US.

Speaker 1:

They said don't worry about it right now, you don't need to file it. Now there's a couple of legal issues here that I need to make sure you understand. This is still a valid law. It's on the books. The Treasury Department has said we're not going to enforce it. So what do you do? Do you need to file this thing or not? I mean, the Treasury Department said don't worry about it, but the law is still on the books. There's still a case pending in the Supreme Court. So here's my take on it right now, you don't need to file. Treasury said we're not going to enforce penalties. So if you're setting up any new entities or you're one of those people that is delayed filing. I filed over 15 for my own companies. We filed thousands for our clients because you had to, and these cases have been going back and forth. We've been saying don't worry about it, it's on pause, nope, it's back. And then just two weeks ago we're like it's back. And now we're like nope, now it's dead, it's gone.

Speaker 1:

Treasury and our federal government this is the US Department of Treasury, which is where FinCEN falls under is the one who enforces this. They are empowered under the law to enforce it and assess the fines and penalties so they can decide frankly how to enforce this. Now the executive branch and its departments need to carry out the law they're supposed to execute and carry out the law. Congress passed this law. The US Supreme Court so far has said it's constitutional. Now here's what's happening, though, in the courts.

Speaker 1:

The case, the biggest case on this was the Texas Top Cop Shop case, which had gone through Texas and through the Fifth Circuit Court. Of Appeals it's like this US Supreme Court, there's a hearing on it this month. Appeals it's like this US Supreme Court, there's a hearing on it this month. They will likely decide the case in the fall, which is usually one's US Supreme Court decision to actually come out after oral argument. So right now, treasury's saying we're not going to make you do this. It's likely, not likely. I said it's possible the US Supreme Court could say this is unconstitutional in the fall and what you're going to see is probably the US Department of Justice in the case saying we don't think this is constitutional either.

Speaker 1:

If Trump's Treasury Department is saying we're not going to enforce this, we think this is a bad law, his US Department of Justice in the Supreme Court oral argument here coming up is going to be taking the same position. The Biden Justice Department we're saying this is constitutional court, you need to uphold this. That's where we're going to see a big change here, of course, in the Justice Department in the case. All right, so now we know Treasury cannot enforce it, so you don't need to file it. If I'm filing new LLCs and what we're telling our clients right now, don't file it. You don't have to. You can voluntarily file if you want and we'll file it for anybody who wants, but you don't have to. Fincen still has the filing on their website. They're still taking filings. If you want to, they may change. They haven't updated all their notices, yet as of the release yesterday, okay, so we got a little bit of a it's not 100% dead.

Speaker 1:

This could be brought back to life. Let's say the US Supreme Court upholds it and says this law is constitutional, but then you got a Treasury Department saying we won't enforce it. What's going to happen? Okay, now you're going to get congressional hearings and you're going to get all this problem, but why aren't you enforcing the law? That's on the books. Congress is going to not be happy, so we don't know where that could go. Frankly, and the executive branch and Treasury is supposed to enforce a law If Congress passes it. They don't have a choice. So that's why they're trying to go into some rulemaking here at Treasury and saying we're going to limit the scope and say we're not really worried about this section. Us small businesses in particular. These are the ones we think are the ones we're going to focus on that need to report. These are the ones where we think there's drug trafficking, money laundering and problems happening in companies which they think is the foreign companies. That's so far what Treasury has said.

Speaker 1:

Now there's really two outcomes that will really be the final nail in the coffin. One is the Supreme Court saying it's unconstitutional Again, we won't know that to the fall, but until then you got a Treasury Department saying we're not doing anything about this, so don't worry about it. That could be a great final outcome. The second final outcome that could be good is there is a bill going through Congress right now. There's actually a bill that just passed a week or so ago that was going to move the deadline from March 21st to January 1st 2026. It passed unanimously in the House of Representatives. Even the Democrats were in favor of moving the mark route to when US businesses had to report on this. But there's a second bill that's trailing behind this in Congress, called the Repealing Big Brother of Overreach Act. That bill has started in the house. It's still making its way through it. It was going behind the extension and now that you see that the Trump administration is behind killing this BOI requirement, particularly for small businesses in the U?

Speaker 1:

S, it is likely that we will see this bill make its way through Congress and I think that would also be a great outcome. That would be the final nail in the coffin as well, because if that bill gets through Congress and passed, no matter what the US Supreme Court does, that will change the law and then there's no issue of is the executive branch carrying out the bill passed by Congress? It takes it away even from the US Supreme Court because it would limit back this issue of saying you don't need to file. That's what that bill would say. By the way, that bill is going to say you don't need to file. So here's the good thing of just lay of the land right now is Treasury has said you don't need to file. The law is still on the books. But we have two very viable outcomes the bill going through Congress and the Supreme Court hearing this year. That could be the final nail in the coffin and you really don't need to worry about it.

Speaker 1:

Now again, if you're sitting, do I need to file this or not? I'm going to set up an LLC next month. I'm setting up a new company tomorrow. No, you don't, I wouldn't file it. You can, but I wouldn't file it. If you're one of the holdouts that never filed, you don't have to file. Now what if you already filed? I filed for all of mine. We filed for thousands of clients because you had to. There's really nothing to do, frankly, because you already went through the work and did it yourself or paid someone else to do it and you had to file it. It was a law. You had to comply with it.

Speaker 1:

Of course, you've been hearing us talk about this and following all the drama, the back and forth this is the seventh back and forth, by the way from the courts to possible bills, to the courts overturning themselves, to going up to a higher court and now to the Treasury Department coming out and saying you don't need to file it. So now this information by the way, if you file the boi to the federal government at the finsongov website, that is private information that is not searchable anywhere. Okay, this is in the treasury records, just like your tax return and all that information is. And, frankly, if you go to the genesis of this, that is why the Trump administration is getting rid of it. Just yesterday, saturday, terrence Williams tweeted Elon Musk saying I'm begging you, get rid of this BOI rule. Elon Musk says I can look into it. A day later, this is Elon Musk in ludicrous mode. A day later, the Treasury treasury department announces we're not enforcing bois, you don't need to file it. No penalties will be assessed. We're going to go into rulemaking and limit who actually needs to file this. Us small businesses don't worry about it, okay. So they move very quickly once this was finally got to their plate. It looks like elon musk was the impetus to this maybe not, who really knows where the wheels are turning in government. And then, of course, president Trump announced today. Actually, he came out and kind of highlighted the press release and announcement that Treasury did yesterday that I mentioned earlier. So that's kind of how we got here. In the last 48 hours is a tweet on X from Elon Musk saying he's looking into this, and then a day later we get the Treasury announcement saying we're not enforcing BOI on small businesses.

Speaker 1:

So meanwhile, this case has, of course, been going to the courts for years in the last few months. So it's been a little bit of a whiplash and I know a lot of people that have been following us and you're a business owner. You've been trying to decide do I need to file this thing or not? Feel like you've been jerked around a little bit, and I understand that. I feel like it too, but we want to let you know what's always going on, okay, what's happening in the courts, what's going on about this?

Speaker 1:

This is the biggest change in LLC incorporation law in my lifetime as a lawyer of 20 years. Nothing is bigger than this. It's a whole new set of rules. You never had to file anything to the federal government besides going and getting your tax ID. And, of course, you got to file your taxes, fincen and treasury saying, well, you need to report all this information you already sent to the state for the most part, and saying you need to disclose all this to us. People thought it was invasive and, frankly, a waste of time, and so that's where I think treasury came out at the end of the day on it as well.

Speaker 1:

All right, now can you voluntarily file? Okay, I've had that question already for some people because they're like Matt, I don't think this is the end of this. I've already gone back and forth on this five or six times. I don't want to worry about it. Can I just voluntarily file? You guys will do it for me anyways, when you set up a new entity, yeah, you can. Okay, our default and I think the default for most people needs to be don't file. If you want to file, you need to let us know, or let your professional or whoever you're using to set up your entity. Hey, I know it's not required right now, but I still want to file the BOI because I don't want to worry about this Now. Again, that's not my advice, but I'm just saying if you want to take that position, because you're sick of the back and forth right now, you could actually still do that. If I were you, though, I wouldn't file.

Speaker 1:

Rely on this announcement from Treasury. Wait till the final rulemaking. We've got the US Supreme Court decision that could come out, and we've got this other bill that could be the final nail in the coffin on it. All right, a couple other things I want to go over. Llcs, of course. As you know, you set up at the state level, you get a tax ID number, you're filing your taxes, you're reporting that income anyways, and this is really where I think the rulemaking. What Treasury is going to look at is don't we already have this information? I think that's been the beef that a lot of people had is like I already had to go get a tax ID and told them I own this company, I already file a tax return and claim this income. I'm required to do that. Why, do guess is? What Treasury is going to say is if you do these things. You have a tax ID, you claim this income, which you're legally required to anyways. You don't need to file this, and that's how they're going to try and get an end around this law and this rule is, by kind of creating some big loopholes, that's going to capture every small business owner that are legally obligated to report their income, showing frankly who owns the LLC and is getting that income at the end of the day.

Speaker 1:

Next thing I want you to know about, too, is my channel. Please make sure you're subscribed to the channel. I'm always talking about how to protect your assets using LLCs, how to save on taxes by using S-corporations or other entities that are great tax planning mechanisms. We also talk about how to build wealth using retirement accounts, investing in alternative assets. I talk about that every day here on my channel. Please make sure you're subscribed and I'll be giving you the updates on the things you need to know to stay protected, keep saving and protecting your wealth. I'm Matt Sorensen. We'll see you next time.

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