The Corporate Transparency Act (CTA) is sort of gone! No need to report now!
ANOTHER UPDATE: On March 2, 2025, the U.S. Treasury Department announced it will suspend enforcement of the Corporate Transparency Act against U.S. citizens and domestic reporting companies. The key points of the announcement include:
- No penalties or fines will be enforced against U.S. citizens or domestic reporting companies under current regulatory deadlines
- No penalties or fines will be enforced even after forthcoming rule changes take effect
- Treasury will issue proposed rulemaking to narrow the scope to foreign reporting companies only
The Treasury Department stated this decision was made to support American taxpayers and small businesses while ensuring regulations are appropriately tailored to advance public interest.
UPDATE: On February 27, 2025, FinCEN announced it will not issue fines, penalties, or take enforcement actions against companies that fail to file or update their BOI reports by current deadlines under the CTA. This enforcement pause will remain in effect until a forthcoming interim final rule becomes effective and new deadlines have passed.
The CTA is a federal law enacted on January 1, 2021, as part of the Anti-Money Laundering Act of 2020, which was included in the National Defense Authorization Act for Fiscal Year 2021.
The CTA was designed to enhance financial transparency and combat money laundering, terrorist financing and other illicit activities by requiring certain business entities to report their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN).
Key Aspects
Key aspects of the CTA include:
- Reporting Requirements: Most corporations, limited liability companies and similar entities created or registered to do business in the United States must report information about their beneficial owners to FinCEN.
- Beneficial Owner Definition: A beneficial owner is generally defined as an individual who directly or indirectly owns or controls at least 25% of the entity or exercises substantial control over the entity.
- Required Information: Entities must provide identifying information about their beneficial owners, including full legal name, date of birth, residential address and an identification number from a document such as a driver’s license or passport.
- Exemptions: Certain entities are exempt from reporting requirements, including publicly traded companies, banks, credit unions, investment companies, tax-exempt organizations and companies with more than 20 full-time U.S. employees and $5 million in gross receipts.
Legal Challenges & Developments
The CTA’s implementation has been contested in multiple courts:
- In National Small Business United v. Yellen, plaintiffs challenged the constitutionality of the CTA, resulting in an exemption for the named plaintiffs and association members.
- More significantly, in Smith v. U.S. Department of the Treasury in the Eastern District of Texas, the court issued an order on January 7, 2025, that temporarily stayed (suspended) FinCEN’s regulations implementing the BOI reporting requirements.
On February 18, 2025, the Texas court agreed to stay its own January 7 order after the Department of Justice appealed the decision on February 5. This means the BOI reporting requirements are back in effect.
The CTA authorizes significant penalties for non-compliance (including civil penalties of up to $500 per day and criminal penalties including imprisonment). However, FinCEN appears to be taking a flexible approach during this period of legal uncertainty and transition.
The enforcement landscape continues to evolve, with FinCEN signaling a willingness to modify requirements while maintaining the core transparency objectives of the law. This suggests a potential “soft enforcement” approach in the near term while regulations are refined.
Key Updates
The Beneficial Ownership Information (BOI) reporting requirements under the CTA have been reinstated by the February 18, 2025 court decision in Smith.
However, FinCEN has extended reporting deadlines as follows:
- The new general deadline is March 21, 2025 (30-day extension from February 19).
- The previously established later deadlines still apply (e.g., disaster relief extensions).
- the exemption for plaintiffs in National Small Business United v. Yellen remain exempt from reporting requirements.
Compliance Action Items
- Review your entities’ reporting deadlines.
- Prepare BOI reports through FinCEN’s E-Filing system.
- Monitor for further updates before March 21 deadline.
To submit your BOI reports, visit the FinCEN BOI E-Filing portal. Additional compliance resources and updates are available here.
If you have any questions, please reach out.