Businesses urge Treasury to destroy BOI data and finalize exemption

Just over 100 business associations have urged Treasury to destroy beneficial ownership information (BOI) records that domestic companies no longer must file, saying the retention of the records no longer serves a legitimate purpose.

In the letter, the businesses also asked Treasury Secretary Scott Bessent to post a final rule that exempts U.S. businesses from the BOI reporting requirement that was part of the Corporate Transparency Act (CTA), Title 64 of P.L. 116-283.

“These beneficial owners’ sensitive personal information — including their names, addresses, and passport or driver’s license numbers — remains in a database managed by the Financial Crimes Enforcement Network, exposing them to ongoing cybersecurity and unauthorized disclosure risks,” the letter said.

CTA background

The Financial Crimes Enforcement Network (FinCEN), which administers BOI reporting under the CTA, issued an interim final rule in March that removed the requirement for U.S. companies and persons to report BOI.

Under the CTA, which Congress passed in 2021 as an anti-money-laundering initiative, reporting companies, which are defined as corporations, limited liability companies (LLCs), and similar entities, were required to disclose the identity and information about beneficial owners of the entities. For new entities incorporated after Jan. 1, 2024, reporting companies also were required to disclose the identity of “applicants” — defined as any individual who files an application to form a corporation, LLC, or other similar entity.

Letter to Treasury

About 16 million domestic entities complied with BOI reporting requirements before the administration narrowed them to apply only to foreign entities, said the letter, dated Jan. 20. In November 2024, FinCEN estimated that reporting companies had filed 6.5 million BOI reports.

The 101 signatories represent “millions of Main Street businesses,” said the letter, which was initiated by the Main Street Employers Coalition, an affiliate of S-CORP. They include the National Small Business Association (NSBA) and the National Federation of Independent Business (NFIB), which sued separately over the BOI reporting requirements.

Previously, in a letter sent last April, the NFIB asked Bessent to add language to the interim final rule to require the destruction of the BOI records.

FinCEN comments

When FinCEN Director Andrea Gacki spoke in September to a House subcommittee, she said FinCEN planned to finalize the interim rule on BOI reporting “in the upcoming year.” She also said that “along with the resolution of the rule, we intend to resolve questions around the data that we gained and dispose of data that is no longer legally required to be filed. So, we look forward to concluding that this year.”

In the courts

The businesses urged Bessent to act quickly, especially in light of what it said are 12 federal cases challenging the validity of the CTA, including the NSBA case that it said is headed to the Supreme Court. In addition, the federal government has said in a court brief that the CTA’s removal of the BOI filing requirement for domestic companies was an executive branch decision that did not affect the CTA’s constitutionality.

“Given this legal uncertainty and the fact that domestic businesses are no longer subject to the CTA’s reporting requirements, the continued retention of their data serves no legitimate government purpose,” the letter said.

“The longer the Treasury Department delays, the greater the risk there will be misuse of this sensitive information,” the letter said. “Main Street businesses deserve certainty and to know their personal information will not be ‘warehoused’ indefinitely awaiting a new administration and a change in policy. The undersigned organizations urge you to act swiftly to protect American businesses by purging the CTA database and finalizing the BOI rule now.”

Treasury did not respond to a request for comment.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.