The Corporate Transparency Act Update: A Reprieve for American Businesses?

By Sarah Hibbard, Kenneth Ashton, Garth D. Stevens, John G. Weston, and Brett W. Johnson

In another twist as to the future of the Corporate Transparency Act’s (CTA) implementation and judicial intervention, on February 27, 2025, the Financial Crimes Enforcement Network (FinCEN) announced that it will not be enforcing the beneficial ownership information (BOI) reporting obligations under the CTA until a forthcoming interim final rule on reporting becomes effective. As stated in previous notices, it was unclear how the new Trump administration was going to address CTA compliance. As stated in the announcement, FinCEN will not issue “…any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update BOI reports…” by the current deadlines.

In a further development, on March 2, 2025, the Treasury Department announced that not only will FinCEN 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.” According to the latest notice from the Treasury Department, the forthcoming proposed rulemaking will narrow the scope of the rule such that only foreign reporting companies will be required to file BOI reports.

The Treasury Department stated that it is narrowing the BOI reporting obligations in the interest of supporting small businesses by ensuring that the rule is appropriately tailored to advance matters of national security, intelligence, and law enforcement activities.

FinCEN’s and the Treasury Department’s announcements come a week after the U.S. District Court for the Eastern District of Texas, in Smith, et al. v. U.S. Department of the Treasury, granted the Department of Justice’s request to stay the nationwide injunction that had previously paused CTA reporting requirements, which effectively reinstated the CTA’s reporting obligations.

In response to the court’s decision and as part of the on-going review of the CTA’s implementation, FinCEN had announced its intention to issue an interim BOI Reporting Rule to further extend BOI reporting deadlines by March 21, 2025, and to issue a notice of proposed rulemaking, seeking public comment on potential revisions, later this year in an effort to minimize the burden on small businesses to reduce the burden for lower-risk entities, including many U.S. small businesses.

What Does This Mean for CTA Compliance?

Based on this announcement, compliance with the extended CTA filing deadline is, for the time being, voluntary. However, this is still subject to potential change based on the outcome of the above-noted interim rule. FinCEN has stated that it recognizes “the need to provide new guidance and clarity as quickly as possible, while ensuring that BOI that is highly useful to important national security, intelligence, and law enforcement activities is reported.”

At this point, it is up to each reporting entity to decide if it wants to comply with the CTA’s BOI reporting requirement by the most recently established March 21, 2025, filing deadline (or other applicable filing deadlines for reporting entities formed in 2024 or thereafter), or if it wants to wait for the issuance of the interim final rule before filing any required BOI report. Companies that elect not to submit BOI reports by March 21, 2025, should at least consider assembling required information for such reports in the event that such interim final rule does result in a BOI reporting obligation.

Future of the CTA

Impacted entities or other interested non-governmental organizations may consider weighing in and filing an amicus curiae brief in this matter to inform the Fifth Circuit how its forthcoming opinion might impact business operations or other constitutional rights.  

There are also opportunities for outreach regarding congressional action. Companies, trade organizations, and other interested parties may want to consider reviewing the impact of the CTA on their operations and determine whether to vocalize any concerns via the Fifth Circuit (or the Supreme Court, if relief is sought there) or through the rule-making or legislative process.

Finally, FinCEN is inviting comment on the upcoming interim final rule. Courts have previously criticized objectors to new regulations that did not submit a comment during the drafting process. As such, entities should consider submitting such a comment to assist in educating regulators as to either the potential illegality of the proposed rule or the impact (negative or positive) on a business or industry. For example, the government in its filings have downplayed the costs and consequences associated with CTA compliance. Now, entities are in a position to educate FinCEN as to the accuracy of the assertions as to real circumstances. This may help ensure that unintended consequences or errors are not overlooked. These comments help form the administrative record upon which a court may eventually evaluate the new implementation rules and, most importantly, related penalties.