FILE – Treasury Secretary Janet Yellen receives a briefing during a visit to the Financial Crimes Enforcement Network (FinCEN) in Vienna, Va., Jan. 8, 2024. The National Small Business Association has won a court challenge against the Corporate Transparency Act , a law designed to combat money laundering.
Susan Walsh / AP
A deadline for a new federal requirement affecting small businesses is approaching, but litigation and education efforts have caused confusion and opened the door for scammers, especially small business owners in Spanish-speaking communities.
Small businesses with 20 or fewer employees are now required to file a beneficial ownership information report with the US Treasury Department. The January 1, 2025 deadline is currently voluntary due to pending litigation.
Reporting began last New Year’s Day, but two lawsuits from Texas and Alabama put enforcement of the 2025 filing deadline on hold, temporarily.
Some business advisors have told their clients that they will have to submit the information and have done some education on the program, but to the end.
“We shouldn’t be telling people what is required or not required because it’s not our program,” said Trevor Leahy, Oregon Secretary of State’s small business ombudsman at the small business assistance office.
The federal reporting requirement is part of the Corporate Transparency Act of 2021. The law requires business owners to report their personal information and submit copies of identification online.
The law aims to combat money laundering, but Molly Day, vice president of public affairs for the National Small Business Association, said people who are already committing financial crimes may not be likely to self-report their personal information.
“I don’t think it will do anything,” she said.
Her organization sued the federal government this year, putting the lawsuit on hold for about 65,000 NSBA members.
A second lawsuit, brought by Texas Top Cop Shop, Inc., led to the report that all affected businesses will go voluntary, for now.
Leahy said he is encouraging small business owners to stay up-to-date by signing up for electronic alerts from FinCEN, Financial Crimes and Enforcement Network website.
Some small business owners haven’t received any information about the new reporting requirement, or if they have, Jose Balcazar said, it’s likely to be misleading.
Balcazar, a bilingual business adviser with the Small Business Development Center at Central Oregon College, said his office learned of official-looking letters sent to business owners informing them of reporting requirements and then asking the owners hundreds of dollars to submit the information in the name.
The treasury warns people about the frauds in it website. Filing a beneficial ownership information report is free and can be done on FinCEN’s website.
Balcazar’s team had been working to help business owners learn how to report, but with all the delays and confusion, outreach has been difficult.
“Unfortunately there is not much press information, especially in Spanish,” Balcazar said.
FinCEN’s website has an FAQ sheet in multiple languages, but all portals and other reporting information are available in English. The website can be translated into Spanish using Google’s website translation function.
Leahy said his office participated in a bilingual education effort in the Portland suburb of Forest Grove to reach out to Spanish speakers about the new requirement.
In Central Oregon, Balcazar said he proactively reaches out to his customers to inform them.
If the law survives legal challenges, penalties for failure to provide information could be up to $10,000 and two years in prison.
To learn more about Reporting Beneficial Ownership Information, people can go to FinCEN.gov/boi. Small business owners who prefer to do business in Spanish can contact the Oregon Secretary of State Office of Small Business Assistance at 1-844-469-5512 or Central Oregon Community College Small Business Development Center at 541-383-7290.