The following is from a Treasury Department Announcement issued March 2, 2025:
The Treasury Department is announcing today that, with respect to the Corporate Transparency Act ("CTA"), not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either. The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.
U.S. Secretary of the Treasury Scott Bessent issued the following statement:
"This is a victory for common sense. Today’s action is part of President Trump’s bold agenda to unleash American prosperity by reining in burdensome regulations, in particular for small businesses that are the backbone of the American economy."
Prior to this announcement, there was a great deal of uncertainty regarding the risk of non-compliance with the Act's reporting requirements. There were several lawsuits seeking to block implementation of the Act. On January 7, 2025, the U.S. District Court for the Eastern District of Texas issued an order staying FinCEN’s regulations implementing the BOI reporting requirements, precluding FinCEN from requiring BOI reporting or otherwise enforcing the CTA’s requirements. On February 5, 2025, the U.S. Department of Justice—on behalf of Treasury—filed a notice of appeal of the district court’s order and, in parallel, requested a stay of the order during the appeal.
On February 18, 2025, the court agreed to stay its January 7, 2025, order until the appeal is completed. Given this decision, FinCEN’s regulations implementing the BOI reporting requirements of the CTA were no longer stayed. Thus, subject to any applicable court orders, BOI reporting was finally mandatory, but FinCEN notified the courts and the public that it would be providing additional time for companies to report.
The United States Corporate Transparency Act (the “CTA”) became effective at the start of 2024. Under the CTA, your company may have been be required to report its “beneficial owners” to the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the Treasury Department charged with protecting the US financial system from illicit use, fighting money laundering and promoting national security. Failure to report risked significant fines and penalties for both companies and for their beneficial owners. The law also exempted large and publicly traded companies. focusing instead on smaller entities, like small limited liability companies, corporations, and partnerships.
The CTA requires non-exempt existing companies to file a report with FinCEN before the end of the 2024 calendar year and requires companies that are newly created or registered to file a more detailed report within 90 days after the company is first organized or registered in the US. The CTA also requires companies to update these filings within 30 days of any change in previously filed information.
The CTA only applies to organizations that either(a) are formed by making a filing with a state’s Secretary of State (or other office charged with forming entities) or (b) are foreign companies that have registered to do business in the United States by making a filing with a state Secretary of State (or other office). So, the CTA does not apply to sole proprietorships, general partnerships or (depending on state) unincorporated nonprofit associations, or trusts.
The CTA contains 23 exemptions for various types of companies. Most of these exemptions are for companies which are already subject to a high amount of regulation, such as public companies, banks, insurance companies, other types of financial firms and utilities. There are also exemptions for certain types of entities where either Congress or FinCEN believed the burden of reporting would be inappropriate or unnecessary. These include tax-exempt entities, including most charities, and certain inactive entities. Importantly, The CTA also has an exemption for larger companies who meet certain employment and income thresholds and which also have operating offices in the U.S.
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