Reasonable constitutional challenges on several grounds are working their way through federal courts and none will likely be settled before the end of 2024. Ambiguities and circular logic make interpretations of beneficial ownership near boundless. For anyone whose questions of beneficial ownership reside in a gray area, good faith effort may be the only reasonable path forward—and it may be costly in terms of time and advisor costs. Civil and criminal penalties hinge on “willful” behavior, which is ultimately in the eye of your federal prosecutor. Altogether, it's worthwhile to tread carefully, complete your reports in a timely manner, and update them whenever any information in the report changes.
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How are we discounting enforcement risk for Corporate Transparency Act violations?
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As specified in the Corporate Transparency Act, a person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues. However, this civil penalty amount is adjusted annually for inflation. As of the time of publication of this FAQ, this amount is $591.
A person who willfully violates the BOI reporting requirements may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000. Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information, or willfully failing to correct or update previously reported beneficial ownership information.
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