On March 2, 2025, the U.S. Department of Treasury (the “Treasury Department”) issued a Press Release announcing that it will not enforce any penalties or fines against U.S. citizens or domestic reporting companies and their beneficial owners based on a failure to file or update beneficial ownership information (“BOI”) reports pursuant to the Corporate Transparency Act (“CTA”), which represents a major change in the application of the CTA. In furtherance of this announcement, the Treasury Department indicated that it will issue a proposed rule that will narrow the scope of BOI reporting to “foreign reporting companies” only.

How We Got Here

As we reported in our prior CTA Alert, on February 18, 2025, the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the Treasury Department, issued a Notice indicating that the BOI reporting requirements under the CTA are back in effect and extending the filing deadline for most reporting companies to March 21, 2025.  Following FinCEN’s announcement, both FinCEN and the Treasury Department have published an announcement with respect to the enforcement and scope of the CTA.

February 27, 2025 – FinCEN Notice

On February 27, 2025, FinCEN announced that it will not issue any fines or penalties or take any other enforcement actions against any companies based on a failure to file or update BOI reports pursuant to the CTA by the current reporting deadlines (the deadlines set in their Notice on February 18).  Additionally, FinCEN stated that it intends to issue an interim final rule no later than March 21, 2025 that will further extend the current reporting deadlines, and will provide that no fines or penalties will be issued, and no enforcement actions will be taken, until the new relevant reporting deadlines in the forthcoming interim final rule have passed.

March 2, 2025 – Treasury Department Press Release

On March 2, 2025, the Treasury Department expanded on FinCEN’s Notice announcing that not only will it not enforce the CTA under the current reporting deadlines, but that even after FinCEN’s forthcoming interim final rule takes effect, the Treasury Department will not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners.  The Treasury Department also announced that it will be issue a proposed rulemaking that will narrow the scope of  BOI reporting to “foreign reporting companies” only.  A “foreign reporting company” currently means any entity formed under the law of a foreign country and registered to do business in any State or tribal jurisdiction.

Takeaway

More specific guidance and rulemaking is needed from FinCEN and/or the Treasury Department, given the Treasury Department’s announcement on March 2, 2025, as the Treasury Department is the main governmental agency tasked with collecting BOI reports (through its bureau, FinCEN) and general enforcement of the CTA. Reporting companies that have not yet filed an initial, updated, or corrected BOI report may consider waiting to file BOI reports until new guidance is issued by FinCEN and/or the Treasury Department, as no penalties or fines will be enforced failing to file BOI reports by the current March 21, 2025 deadline.

Additionally, even after the current March 21, 2025 deadline and any new reporting deadline extension to be established by FinCEN, (i) U.S. citizens and (ii) domestic reporting companies (a “domestic reporting company” means any entity that is created by the filing of a document with a secretary of state or any similar office under the law of a State or Indian tribe) and their beneficial owners may also consider waiting to file BOI reports until further guidance is issued by FinCEN and/or the Treasury Department or other developments arise, such as judicial or legislative action, as they will not face any penalties or fines from the Treasury Department.

Even with the Treasury Department’s current stance suspending enforcement of the CTA against U.S. citizens and domestic reporting companies (and their beneficial owners), we will continue to monitor this situation. The Treasury Department’s suspension of enforcement of the CTA may face legal challenges, or it, or the present or a subsequent administration could restore the reporting requirements.  Additionally, the CTA’s reporting requirements will continue to be subject to litigation and possible legislative action.

If you have questions or would like more information on the content of this communication, please contact any member of our Corporate Practice Area.