On Sunday, March 2, 2025, the U.S. Department of the Treasury announced that it is suspending enforcement of fines and penalties under the federal Corporate Transparency Act (CTA) against U.S. citizens and domestic reporting companies. See https://home.treasury.gov/news/press-releases/sb0038. The announcement makes clear that the Treasury Department, of which the Financial Crimes Enforcement Network (FinCEN), the agency tasked with enforcing the CTA, is a part, is suspending enforcement of fines and penalties under the CTA against U.S. citizens and domestic reporting companies not only under current deadlines, but also after upcoming changes to the Beneficial Ownership Information Reporting Requirements (BOI Reporting Rule) take effect.
The Treasury Department also announced that it will issue a proposed rulemaking that will narrow the scope of the BOI Reporting Rule to apply to foreign reporting companies only.
A few days earlier, on February 27, 2025, FinCEN announced it would not impose fines or penalties or take enforcement actions for failure to comply with the BOI Reporting Rule by the current deadline, March 21, 2025. The March 21 deadline had been announced by FinCEN on February 19, 2025, two days after the U.S. District Court for the Eastern District of Texas stayed (i.e., lifted) an injunction against the BOI Reporting Rule in the case of Smith et al. v. U.S. Department of the Treasury et al. FinCEN’s February 27 announcement advised that, no later than March 21, it would issue an interim final rule that extends reporting deadlines beyond March 21, and further, that FinCEN would issue a notice of proposed rulemaking later this year that would narrow the scope of the BOI Reporting Rule to focus on entities that pose the most significant law enforcement and national security concerns and to minimize burdens on small business.
The Treasury Department’s March 2 announcement offers greater clarity regarding the future scope of the anticipated proposed rulemaking by confirming that the BOI Reporting Rule will not be enforced against U.S. citizens and domestic reporting companies under either its current version or the expected future version, and that the reporting requirements under the rule will be narrowed to apply only to foreign reporting companies.
Litigation Continues
Litigation continues in various federal court cases around the nation regarding whether the CTA is constitutional, including in two cases discussed in our previous Client Alert on February 20, 2025, McHenry et al. v. Texas Top Cop Shop, Inc. et al. and the Smith case. The latest announcements by the Treasury Department may have a significant impact on these cases, but the specific impact will depend on the particular issues raised in each case and on the terms of whatever revised final rule is adopted after the proposed rulemaking later this year.
Where Things Stand Today
Based on these announcements from FinCEN and the Treasury Department, it appears that U.S. citizens and domestic reporting companies (as defined in the BOI Reporting Rule) will not, for the foreseeable future, be required to file or update a BOI Report. U.S. citizens and domestic reporting companies should continue to monitor developments with respect to enforcement of the BOI Reporting Rule, and the details of the anticipated revisions to the BOI Reporting Rule, to confirm whether they will remain exempt from enforcement.
Litigation over the constitutionality of the CTA and BOI Reporting Rule is expected to continue in the Texas Top Cop Shop and Smith cases in the Eastern District of Texas and on appeal to the Fifth Circuit, and in other federal courts across the country. Legislative changes to the CTA, and the potential for repeal of the CTA, are being considered by Congress as well, as discussed in our previous Client Alerts. It is not yet clear how the latest announcements will affect this litigation or actions Congress might take regarding the CTA.
What You Should Do Now
U.S. citizens and domestic reporting companies should continue to monitor developments regarding the CTA and the BOI Reporting Rule, but they appear to have a long-term reprieve from obligations to file BOI Reports or otherwise comply with the CTA.
BLM&H has previously written an extensive summary of the BOI Reporting Rule, including on topics such as what companies are “reporting companies”, how to identify a reporting company’s “beneficial owners” and “company applicants”, and what information must be included in a BOI Report (“Corporate Transparency Act Beneficial Owner Information Reporting Requirements Take Effect on January 1, 2024 – What Business Entities Need to Know and Do” found at https://blmhlaw.com/corporate-transparency-act-beneficial-owner-information-reporting-requirements-take-effect-on-january-1-2024-what-business-entities-need-to-know-and-do/). If you are unfamiliar with the BOI Reporting Rule, we encourage you to read our summary.
How BLM&H Can Help You.
BLM&H will continue to monitor developments with respect to the CTA and the BOI Reporting Rule, interim rules, proposed rulemakings and legislation affecting the CTA and BOI Reporting Rule, as well as the various cases challenging their enforceability and constitutionality.
BLM&H can help you understand and comply with the BOI Reporting Rule. If you have questions about the BOI Reporting Rule, or if you need help preparing for your company’s initial, updated or corrected filings, please contact:
Kevin J. Loechl, kloechl@blmhlaw.com, 404.266.3205
Hunter Holliday, hholliday@blmhlaw.com, 404.266.3206
Quincy H. Jackson, qjackson@blmhlaw.com, 404.266.3212
Colton E. Francoeur, cfrancoeur@blmhlaw.com, 404.266.3217