CTA Status Report

By: Brett A. Hodges

In yet another installment of Corporate Transparency Act (CTA) related drama, on March 2 the Treasury Department announced that they will not be enforcing the existing compliance deadlines. After much back and forth in the courts, FinCEN had set a deadline of March 21, 2025, for companies to submit their beneficial ownership information reports. However, the Treasury Department has now decided that they will not be enforcing this deadline. Not only that, but the Treasury Department stated that they will not be enforcing penalties or fines associated with the CTA against U.S. citizens and domestic reporting companies after an impending rule change is placed into effect.

According to the Treasury Department, the CTA reporting rules are set to be narrowed to reduce the number of companies affected by the CTA. Assuming that the Treasury Department is successful in making this rule change, the CTA would be limited in its application to foreign reporting companies. While businesses may still choose to voluntarily comply with the CTA’s mandates, it would appear that for the time being, there is no penalty for failing to do so.

With the immense amount of uncertainty that has surrounded the CTA in recent months, it is recommended that businesses maintain their beneficial ownership information on file. The filing of this information with FinCEN is not currently required, but the CTA’s enforcement track-record tends to indicate that this could change. In any event, companies should remain ready to comply in the event that FinCEN changes course and decides to reinstate enforcement.