Supreme Court reinstates new requirement for IDs and mug shots of corporate principals
The US Supreme Court has stayed the nationwide injunction against enforcement of a Federal law requiring owners or principals of all corporations to submit copies of ID documents, including photos, to the Financial Crimes Enforcement Network (FinCEN) of the US Department of the Treasury.
The Supreme Court’s ruling leaves business owners and officers, and FinCEN, scrambling to figure out what to do — at a moment when how the Federal government might use personal information in ways that weren’t anticipated when it was collected is a hot topic.
The original deadline for filing of Beneficial Owner InformatIon (BOI) with FINCEN was to be January 1, 2025. But by then, multiple lawsuits against the Corporate Transparency Act had been filed, and the judge in one of those caseS had issued a nationwide injunction against enforcement of the law while the lawsuits were pending.
The Supreme Court’s decision to overturn that injunction allows the lawsuits and appeals to continue, but in the meantime allows the government to enforce the filing requirement.
Following the stay of the District Court injunction pursuant to the Supreme Court’s decision, FinCEN announced a new deadline of March 21, 2025, for filing of BOI (including copies of IDs) for most companies. Another injunction from a different judge in a different Federal court district remains in effect, but it applies only to the plaIntiffs in that case.
FinCen estimates that collecting and submitting the required information will require, on average, 90 to 650 minutes per company. That’s a far from trvial burden for, for example, a sole proprietor with a personal LLC. The cost could be much higher for even a small business thta has to hire a lawyer to figure out who is considered a “beneficial owner” or officer subject ton the reporting requirement.
Those who search for information on the Web about BOI filing requirments are likely to be led to the flood of scam sites set up to rip off would-be BOI filers with excessive facilitation fees as intermediaries, while harvesting personal information for identity theft. What does it say about the purposrted justification for this rule that the requirements of the “Financial Crimes Enforcement Network” are providing a windfall for financial fraudsters?
The purported limitations and controls on access to and use of BOI filings ring hollow in light of the access to and use of personal information from Federal databases in unanticipated ways and by entities and by newly-created entities with ambiguous authority, such as the White House Department Of Government Efficiency (DOGE).
With concern growing about how this informaiton might be misused, legislation is pending in Congress to repeal the Corporate Transparency Act or postpone its effective date.
On February 10th, the House of Representatives approved H.R. 736, a bill to extend the BOI filing deadline until January 1, 2026, by a unanimous vote of 408 to 0. The same or a similar bill is likely to be introduced in the Senate. Postponement might give time for the pending appeals in the lawsuits challenging the law to play out, or for Congress to repeal the law.
A bill to repeal the Corporate Transparency Act and the BOI reporting requirement has been introduced in the House as H.R. 425 and in the Senate as S. 100, “Repealing Big Brother Overreach Act”. No action has yet been taken on this bill in either chamber.