Since its enactment in 2021, the Corporate Transparency Act (CTA) and its accompanying reporting requirements as promulgated by the Department of the Treasury have been in a state of flux. The CTA has been under attack primarily due to its allegedly unconstitutional methods in eliciting beneficial ownership information (BOI) from reporting companies. It is still unclear what the ultimate fate of the CTA will be; however, its current status as being only applicable to non-U.S. companies, appears to be here to stay.
In its original conception, the CTA required reporting companies—small foreign or domestic companies who have registered to do business by the filing of a document with a secretary of state or similar office—to provide the Financial Crimes Enforcement Network (FinCEN) with BOI.
BOI consists of identifying information with respect to the company, as well as its beneficial owners, who, in the simplest of terms, are persons who exercise substantial control over, or own at least 25% of, the entity’s ownership interests.
Failure to file the required BOI by the reporting deadline would have subjected reporting companies to fines and even criminal penalties. The purpose of the CTA was to mitigate money laundering, the financing of terrorism, tax fraud and countless other financial crimes, which were found by Congress to have been committed using corporate structures to evade detection by law enforcement.
Deadline Postponements
However, the reporting deadline has been repeatedly postponed due to a series of lawsuits that questioned Congress’s authority to impose such requirements on small business owners. The original deadline was set for January 1, 2025. Most recently, the deadline was pushed back to March 21, 2025, as a result of the February decision by the U.S. District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury to stay a previously granted injunction.
On February 27, 2025, FinCEN announced that, notwithstanding the approaching BOI filing deadline, FinCEN will not be taking any enforcement actions with respect to any reporting companies for failure to comply with the reporting requirements.
This announcement came in tandem with a March 2, 2025, press release from the Department of The Treasury announcing that there will be an interim final rule that will not enforce any penalties or fines against domestic reporting companies.
Interim Final Rule
The interim final rule was finally issued on March 21, 2025, and sets forth the relatively narrow enforcement of the reporting requirements. The rule simply changed the definition of reporting company to only include corporations, LLCs and other similar entities that were formed under the law of a foreign country and registered to do business in any state.
Furthermore, the rule exempts U.S. citizens who are beneficial owners of a reporting company from any of the reporting obligations. Thus, if you own a company that was formed in the U.S., which was formerly subject to BOI reporting obligations, those same requirements no longer apply.
It should be noted that the recent regulatory changes are in large part due to the current administration’s view of the reporting requirements. In the meantime, you can enjoy the fact that your business may no longer be subject to the Corporate Transparency Act. And while it seems likely that the rules will remain in their current form for the time being, there could still be future revisions that reimpose the reporting requirements for domestic companies.