If you don’t submit this report, the Treasury Department can fine your small business $10,000.

Small businesses and their owners could face fines of $10,000 or more if they don’t comply with the U.S. Treasury’s new reporting requirements by the end of the year, but many businesses still aren’t complying. shown in the evidence.

The Corporate Transparency Act passed in 2021 established this requirement. The law aims to curb illicit finance by requiring many companies operating in the United States to report beneficial ownership information to the Treasury Department’s Financial Crimes Enforcement Network (also known as FinCEN). There is.

For many companies, the first beneficiary information report is due by January 1, 2025.

According to federal estimates, this applies to approximately 32.6 million businesses, including certain corporations and limited liability companies.

The Treasury Department did not respond to CNBC’s request for comment on the number of BOI reports submitted to date.

According to FinCEN, this data helps identify those who own or control companies, directly or indirectly, and “allows bad actors to gain ill-gotten gains through shell companies or other opaque ownership structures.” “It makes it difficult to hide or profit from it.”

“Corporate anonymity enables money laundering, drug trafficking, terrorism, and corruption,” Treasury Secretary Janet Yellen said in announcing the launch of the BOI portal in January.

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According to FinCEN, businesses and operators who do not file charges could be subject to civil penalties of up to $591 per day for each day of continued violation. This amount is adjusted for inflation. Additionally, he could face a criminal fine of up to $10,000 and up to two years in prison.

“Small businesses are suddenly faced with fines that can sink their businesses,” said Charlie Fitzgerald III, a certified financial planner based in Orlando, Fla., and a founding member of Moisand Fitzgerald Tamayo. We will do so,” he said.

The federal government received about 9.5 million applications as of Dec. 1, according to statistics provided by FinCEN to the office of Republican U.S. Rep. French Hill, R-Arkansas, who is seeking to repeal the Corporate Transparency Act. Ta. Hill’s office provided the data to CNBC.

This number represents approximately 30% of the total estimate.

As of early December, FinCEN was receiving about 1 million new reports each week, Hill’s office said.

According to FinCEN, a “beneficial owner” is a person who owns at least 25% of the ownership of a company or has “effective control” of the company.

Companies must report information about their beneficiaries, including name, date of birth, address, and information from IDs such as driver’s licenses and passports, in addition to other data.

Businesses that existed before 2024 must report by January 1, 2025. Businesses incorporated in 2024 must file within 90 calendar days of the effective date of incorporation or registration. Those created after 2025 have 30 days.

There are several exceptions to this requirement. For example, businesses with more than $5 million in gross sales and more than 20 full-time employees may not be required to file a report.

Many tax-exempt entities already provide similar data, including large corporations, banks, credit unions, tax-exempt entities, and utilities.

Brian Nelson, the Treasury Department’s undersecretary for terrorism and financial intelligence, said in an interview at the Hudson Institute in February that the Treasury Department is using “court reporting” to spread awareness about the BOI registry, which opened on January 1st. We are fully implementing this.”

However, despite outreach efforts, many employers do not appear to comply with or are unaware of this requirement.

The S-Corporation Association of America, a business trade group, said in early October that the scope of compliance in the country is “tough.”

The “vast majority” of businesses have not yet filed their reports, meaning “millions of small business owners and their employees will become de facto felons by early 2025.” ” the report said.

But some say the situation is not so dire.

For example, on December 3, a federal court in Texas temporarily blocked the Treasury Department from enforcing the BOI reporting rules. This means the Treasury cannot impose penalties while the courts conduct a more thorough review of the rules’ constitutionality.

“Companies should still submit information,” said Erika Hanichuk, government affairs director at the Financial Responsibility and Corporate Transparency Coalition. “The deadline itself hasn’t changed. Only the enforcement of the law has changed.”

Lawyers at law firm Fredrickson wrote that the government plans to appeal and that enforcement “may resume” if the injunction is revoked.

Additionally, the Treasury said it would only impose penalties on individuals or companies that “willfully violate” BOI reporting requirements.

Hanichak said authorities are not embarking on a “crackdown.”

“FinCEN understands that this is a new requirement,” FinCEN said in its FAQ. “If you correct errors or omissions within 90 days of the initial reporting deadline, you may avoid penalties. However, if you ignore your obligation to report beneficial ownership information, you may face civil and criminal penalties. There is a sex.”