THE CORPORATE TRANSPARENCY ACT: NOT DEAD YET

Those business owners and attorneys following the ups and downs of the Corporate Transparency Act (“CTA”) are likely feeling some whiplash.  The case law over the past five months has imposed and stayed multiple preliminary injunctions, one of which was appealed up through the Supreme Court of the United States.  There has also been the introduction of new legislation, announcements from the U.S. Department of the Treasury (“Treasury”) and a new interim rule issued by the Financial Crimes Enforcement Network (“FinCEN”).  Many now think that the CTA is “dead” and no longer being enforced.  However, the CTA is not gone yet and certain companies still have to file BOIRs. 

As Of March 21, 2025, FinCEN Has Removed the Requirement For US Companies To File BOIRs. 

The initial filing deadline for all companies required to file BOIRs was January 1, 2025.  This deadline was pushed to March 21, 2025, after the preliminary injunctions delayed the enforcement of the CTA.  Due to the inconsistency, FinCEN had announced that filing BOIRs was temporarily voluntary.  On March 2, 2025, the Treasury announced that it would no longer enforce penalties or fines under the CTA against U.S. citizens or domestic reporting companies and their beneficial owners, adding that the reporting requirements will be amended to narrow the scope of the rule to foreign reporting companies.  It later announced that filing was required but that no penalties or fines under the CTA would be enforced until a new interim rule was announced no later than March 21, 2025.  On March 10, 2025, Senators Sheldon Whitehouse (D-RI) and Charles E. Grassley (R-IA) sent a letter to Treasury Secretary Scott Bessent demanding an explanation for why the Treasury unilaterally decided not to enforce an act duly enacted by the United States Congress.  On March 21, 2025, late on the day after many companies had filed their BOIRs to meet the deadline, FinCEN issued an interim final rule removing the CTA reporting requirement for U.S. companies and U.S. persons.

What Entities Need to File BOIRs Now?

Entities formed under the laws of the United States (also called domestic reporting companies) no longer need to file their BOIRs.  Under the new interim final rule, the revised definition of “reporting company” now means only entities “formed under the law of a foreign country” which are registered to do business in any U.S. State or Tribal jurisdiction.  Foreign entities filing BOIRs will not be required to report any U.S. persons as beneficial owners, and U.S. persons will not be required to report beneficial ownership information with respect to any such entity for which they are a beneficial owner.  Reporting companies registered to do business in the U.S. before the new rule was issued had 30 days from the March 21st publication to file their BOIRs.  New entities have 30 days to file their BOIRs after their registration to do business in the United States.  The exemptions to the reporting requirements contained in the CTA still apply to foreign entities required to file and the same rules still apply regarding who is a beneficial owner and what penalties apply for reporting companies.  Companies that are no longer considered reporting entities are not required to report any updates to their previously filed BOIRs. 

Proposed Legislation

The following legislation has been proposed to either extend the filing deadline for a year or repeal the CTA entirely:

H.R. 736 / S. 505.

• The House unanimously passed H.R. 736 - Protect Small Businesses from Excessive Paperwork Act of 2025 on February 10, 2025.  This bill, if passed by the Senate as S. 505, will extend the CTA filing deadline to Jan. 1, 2026.

• This bill was introduced by U.S. Representatives Sharice Davids (D-KS-03), Zach Nunn (R-IA-03), Tom Emmer (R-MN-06), and Don Davis (D-NC-01). 

• The bill was endorsed by the U.S. Chamber of Commerce.

• The American Bar Association also supports H.R. 736 / S. 505. 

HR 425/S. 100

• In January 2025, it was announced that U.S. Senators Rand Paul (R-KY) and Tommy Tuberville (R-AL) re-introduced the “Repealing Big Brother Overreach Act” to repeal the CTA. 

• Rep. Warren Davidson re-introduced the Repealing Big Brother Overreach Act in the House of Representatives as well.

Until the CTA is repealed or amended, or a new rule is announced by FinCEN, the CTA is still being enforced against foreign reporting companies.  The Treasury may also decide that the CTA is again enforceable against domestic entities.  Therefore, it is recommended that entities continue to monitor the status of the CTA moving forward.