Another Twist in the Enforcement of the CTA and FinCEN Reporting

Previous posts have discussed how the Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) reporting requirement have been the subject of much controversy over the last year.  There have been several lawsuits filed and subsequent court cases addressing the constitutionality of this new requirement.  While there has not been a "final" court resolution about the legality of the BOI requirement, the Department of Treasury issued the following statement on March 2, 2025:

The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, not only will it 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. The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.

As a result, the CTA’s reporting requirement is still the law, but the above declaration by the Trump Administration leaves us in an unusual situation.  The CTA requires the filing of the BOI report but there will not be any penalties for failing to follow the rule.  Until Congress repeals or amends the CTA (if it ever does), the possibility that the BOI reporting requirement could be enforced still exists.  The current administration could decide to change its course or a new administration that takes office in four years could begin enforcing the CTA and BOI reporting requirements.  As a result, businesses must decide whether they want to “voluntarily” file the report now or wait until a future date when the CTA may be enforced and penalties imposed.