FinCEN to Revise CTA Rules by March 21, 2025 – Beneficial ownership reporting requirements could change again, potentially easing compliance for U.S. entities. Here are the latest updates.
SAN DIEGO, CALIFORNIA – The Corporate Transparency Act (CTA) has been a hot topic in the legal industry since its enactment in 2021. However, ongoing legal challenges and shifting regulations have made compliance a moving target for law firms and businesses alike.
The Corporate Transparency Act – The Corporate Transparency Act (the “CTA”) was originally enacted in 2021 to combat and prevent various financial crimes and illicit activities in the U.S. by requiring most entities operating in the country to report on both their beneficial ownership and on those who exert significant control over an entity and its operations. Most entities were or are required to file beneficial ownership information reports (“BOIRs”) in either 2024 or 2025, but the CTA has continued to experience legal and regulatory shifts, causing confusion for reporting entities. This client alert serves to update our clients on the present status of the CTA and BOIRs.
Recent Regulatory Changes
January 23, 2025 – Supreme Court Lifts CTA Injunction: As of January 22, 2025, a nationwide injunction had been in place against the CTA and its enforcement. On January 23, 2025, however, the U.S. Supreme Court ruled that the Federal Government may enforce the CTA.
January 24, 2025 – BOIRs are Optional per FinCEN: On January 24, 2025, while considering the Supreme Court’s ruling and in light of a separate nationwide injunction regarding the CTA that remained in effect, the Department of Treasury’s (the “Treasury”) Financial Crimes Enforcement Network (“FinCEN”) issued guidance that CTA BOIRs were merely optional filings for the time being.
February 18 and 19, 2025 – Lifting of Injunction; Extension of BOIR Timeline: As of February 18, 2025, the remaining nationwide injunction was lifted, clearing the way for enforcement of the CTA, once again requiring BOIRs from reporting companies, and extending the reporting deadline to March 21, 2025 for most entities.
February 27, 2025 & March 2, 2025 – Treasury/FinCEN Enforcement Suspension: However, as of February 27, 2025 (for FinCEN) and March 2, 2025 (for the Treasury), the Treasury and FinCEN announced that such entities would not enforce the CTA or impose any penalties for CTA non-compliance. Further, each entity noted that a revised rule would be introduced by March 21, 2025, which is also currently the extended BOIR reporting deadline, which intends to restrict BOIRs to foreign entities operating in the U.S. only, in order to ease the burden on U.S. small businesses and U.S. citizens.
General Status and Recommendations
Present Status: Presently, there is no nationwide injunction legally preventing enforcement of the CTA. However, given the most recent guidance from the Treasury and FinCEN, the CTA and BOIRs will not be enforced by the March 21, 2025 extended BOIR deadline, and instead, a new, more limited rule will be introduced by such date, which will likely also include a further extended reporting deadline.
Stay Informed, Be Prepared: Given the contradictory rulings and guidance along with other continued legal challenges, the best thing entities can do is to say informed and be prepared to comply with the CTA and to file BOIRs if needed. Our attorneys at Klinedinst PC can help you navigate your unique situation relative to the CTA and BOIRs.
The Corporate Transparency Act remains in flux, with shifting regulations and ongoing legal challenges creating uncertainty for businesses. Staying informed and prepared is key, and legal counsel can help navigate compliance as new rules emerge.
To learn more about the CTA, or to contact a member of the transaction team, please visit:
Note
This update on the CTA is provided as-is and does not constitute legal advice, and should not be relied upon as such. You are encouraged to consult with your attorney with any questions.
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