Current Status of Corporate Transparency Act - U.S. Domestic Companies and U.S. Citizens/Beneficial Owners Do NOT Have to Comply (Updated as of March 2, 2025)
Short guidance: On March 2, 2025, the Treasury Department announced that U.S. citizens and domestic reporting companies/beneficial owners do not have to comply with the CTA reporting requirements. This is the full press release (also found at https://home.treasury.gov/news/press-releases/sb0038):
Treasury Department Announces Suspension of Enforcement of Corporate Transparency Act Against U.S. Citizens and Domestic Reporting Companies
March 2, 2025
The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, 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.
“This is a victory for common sense,” said U.S. Secretary of the Treasury Scott Bessent. “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.”
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Prior to this announcement, on February 27, 2025, FinCEN has stated that it “will not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update beneficial ownership information (BOI) reports pursuant to the Corporate Transparency Act by the current deadlines. No fines or penalties will be issued, and no enforcement actions will be taken, until a forthcoming interim final rule becomes effective and the new relevant due dates in the interim final rule have passed.
So, while companies subject to the BOI report rule under the CTA can submit the reports, they are currently not required to do so.
Please stay tuned to this post for updates.
Longer version (for those of you who are interested in the CTA legal ping pong):
The CTA was enacted by Congress in 2021 as part of the National Defense Authorization Act, and is mostly aimed at combatting illegal financial activities, such as money laundering, tax, fraud, terrorist financing, etc. The CTA essentially requires many U.S. businesses to disclose detailed ownership information to the U.S. Treasury Department so business owners can no longer remain anonymous and/or hide behind shell companies. It came into full effect on January 1, 2024.
The CTA requires businesses created before 2024 to submit information about the beneficial owners and principal decisionmakers, including names, addresses, date of birth, and provide a scanned version of identification (driver’s license, passport, etc.) on or before December 31, 2024. Business created during 2024 had 90 days to comply. As expected, there were multiple legal challenges to the CTA, which had been making their way through the various U.S. courts over the past year. Here is (some) of the relevant court decisions and proceedings:
March 1, 2024 - The U.S. District Court for the Northern District of Alabama granted a preliminary injunction for the plaintiffs in National Small Business United et al. v. Yellen at al., No. 522-cv-01448, holding that the CTA was likely unconstitutional. However, the Court enjoined the U.S. Treasury Department from enforcing the CTA against the plaintiffs, only. Non-parties still needed to comply and report. The Treasury Department appealed this decision, and the U.S. Court of Appeals for the Eleventh Circuit is considering the appeal, having held oral argument on September 27, 2024.
December 3, 2024 - Judice Amos L. Mazzant, III of the U.S. District Court for the Eastern District of Texas in Texas Top Cop Shop v. Garland, No. 4:24-cv-478, held the CTA was unconstitutional and granted a nationwide injunction, including non-parties. The U.S. Government defendants immediately appealed this decision.
December 23, 2024 - (Texas case) The Fifth Circuit motions panel (i.e., a third-judge panel that heard the emergency appeal) overturned the district court’s decision and reinstated the CTA (temporarily as it turns out). Later that day, the U.S. Treasury Department released guidance to U.S. business owners delaying the compliance date under the CTA to January 13, 2025. The plaintiffs immediately asked the entire Fifth Circuit to hear the case (i.e., hearing “en banc”).
December 26, 2024 - (Texas case) Prior to any decisions on the en banc request, the Fifth Circuit merits panel (i.e., the three-judge panel that will hear the substantive aspects of the full appeal) reversed course, keeping the December 3, 2024 preliminary injunction intact. As of December 27, 2024, this is the operative decision for business owners, which means that business owners currently do not need to comply with the CTA.
December 27, 2024 - (Texas case) Fifth Circuit issued a briefing schedule on the merits of the appeal for February 2025. Plaintiffs/Appellants' briefs due 2/7/2025; U.S. government opposition due 2/21/2025; reply brief due 2/28/2025. Oral argument scheduled for 3/25/2025. Although nothing is a guarantee, it appears the injunction is going to stay in place for at least Q1 2025, likely longer, unless there are more emergency appeals.
December 31, 2024 - (Texas case) The U.S. Government applied to the U.S. Supreme Court for a stay of the District Court’s injunction pending appeal
January 2, 2025 - FinCEN has put an alert on their website that states: “In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
January 7, 2025 - (Smith Texas case) The U.S. District Court for the Eastern District of Texas released a decision that pauses the reporting rule implementing the CTA.
January 23, 2025 - (Texas case) The U.S. Supreme Court grants the U.S. Government 12/31/2024 request for a stay, overturning the District Court’s injunction.
February 18, 2025 - (Smith Texas case) The U.S. District Court of Texas in Smith v. U.S. Dep’t of Treasury releases a decision staying its January 7, 2025 order.
February 19, 2025 - FinCEN releases a notice (a copy can be found here: https://fincen.gov/sites/default/files/shared/FinCEN-BOI-Notice-Deadline-Extension-508FINAL.pdf), which extends the reporting deadline for all reporting companies until at least March 21, 2025, and strongly hinted that it may modify or extend the deadline further.
February 27, 2025 - FinCEN releases the following notice (a copy can be found here: https://www.fincen.gov/news/news-releases/fincen-not-issuing-fines-or-penalties-connection-beneficial-ownership), which indicates that FinCEN will not issue any fines or penalties related to the BOI reports that are due under the CTA.
March 2, 2025 - The Treasury Department releases a press release (a copy can be found here: https://home.treasury.gov/news/press-releases/sb0038), which announces it will “not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners,” and that any future rule “will narrow the scope of the rule to foreign report companies only.”