CORPORATE TRANSPARENCY ACT: LEGAL BATTLE CONTINUES
UPDATE 03/04/2025
Not Enforced & Scope Narrowed
As of March 2, 2025, the U.S. Department of the Treasury has announced a significant change in the enforcement of the Corporate Transparency Act (CTA).
What is the Latest?
The Treasury Department will not enforce any penalties or fines against U.S. citizens, domestic reporting companies, or their beneficial owners, even after forthcoming rule changes take effect.
Furthermore, the Treasury Department intends to narrow the scope of the CTA to apply only to foreign reporting companies.
History:
The CTA was enacted in 2021 to help the U.S. Government combat money-laundering, terrorism, tax evasion, and other financial crimes by creating a national database of organizations in the U.S. that identifies the human beings behind the companies as owners or controlling persons.
The Process and Court Proceedings Read Like a TV Drama:
- January 1, 2024 - Final regulations under the CTA were released and became effective. Deadlines for reporting are set for January 1, 2025 for entities created before 2024. (Corporations have to file CTA reports.)
- December 3, 2024 - The United States District Court for the Eastern District of Texas issued a preliminary nationwide injunction, halting the enforcement of the Corporate Transparency Act.
(Required CTA reporting is on hold...)
- December 23, 2024 – The government’s emergency motion to reinstate the CTA’s enforcement was granted by the Fifth Circuit Court of Appeals. Deadlines are pushed back.
(Corporations have to file CTA reports.)
- December 27, 2024 - The merits panel of the Fifth Circuit Court of Appeals reinstated the injuction.
(Required CTA reporting is on hold...)
- January 24, 2025 - The Supreme Court lifted the injunction
(Corporations have to file CTA reports.)
- January 25, 2025 - FinCEN declines to enforce the reporting and has paused enforcement.
(CTA reporting is encouraged but not required.)
- February 18, 2025 - As of February 18, 2025, the Corporate Transparency Act (CTA) reporting requirements are back in effect. FinCEN has extended the reporting deadline by 30 calendar days from February 19, 2025, setting a new deadline of March 21, 2025. During this 30-day period, FinCEN will assess options to further modify deadlines, prioritizing reporting for entities posing significant national security risks. Additionally, FinCEN plans to initiate a process this year to revise the BOI reporting rule, aiming to reduce the burden for lower-risk entities, including many U.S. small businesses.
- As of March 2, 2025, the U.S. Department of the Treasury has announced a significant change in the enforcement of the Corporate Transparency Act (CTA). The Treasury Department will not enforce any penalties or fines against U.S. citizens, domestic reporting companies, or their beneficial owners, even after forthcoming rule changes take effect. This suspension applies to both existing regulatory deadlines and future requirements. Furthermore, the Treasury Department intends to issue a proposed rulemaking that will narrow the scope of the CTA to apply only to foreign reporting companies. This update supersedes previous information about CTA enforcement and reporting deadlines.
What Should You Do?
Despite the current hold on enforcement, we recommend businesses continue to prepare and file their reports as originally planned. While the CTA's enforcement is currently suspended, this situation remains fluid. Proactive preparation is the best strategy to navigate this uncertain legal environment.
- Gather and organize your beneficial ownership information;
- Proceed with report preparation as if deadlines were still in effect;
- Reach out to our firm if you want assistance filing; and
- Check back here often to find out how this will resolve.
Our firm is closely monitoring this rapidly evolving situation. We will provide updates as new information becomes available. If you have any questions about how these developments might affect your business or need assistance with CTA compliance preparation, please don't hesitate to contact us.