Category: FinCEN Updates

On Friday, March 21, 2025, the U.S. Department of the Treasury and FinCEN introduced an interim final rule that significantly alters the enforcement of the Corporate Transparency Act (CTA). This rule narrows the scope of the Beneficial Ownership Information (BOI) reporting requirements, with a primary focus on foreign entities and their foreign beneficial owners.

For Business Owners: What You Need to Know

Under the interim rule, U.S. citizens and domestic reporting companies are no longer required to report BOI to FinCEN. It focuses enforcement on foreign entities and their foreign beneficial owners, who are still required to file BOI Reports to FinCEN. These entities must comply by the new deadline of April 20, 2025. 

For U.S.-originated businesses, this interim rule provides immediate relief from reporting obligations. However, it’s important to understand that while U.S. businesses are exempt from reporting under this interim rule, the CTA’s legal framework remains intact. Future reporting rules may reinstate the requirement for U.S. entities or citizens to disclose BOI. Therefore, it’s essential not to disregard the CTA for good, as future rules may change.

For Practitioners: How This Affects Your Practice and Clients

As a practitioner, this interim rule may provide relief by removing potentially labor-intensive tasks from your plate. However, it remains prudent to stay informed about the CTA. Even if many of your clients are domestic entities or U.S. citizens, future reporting obligations may require U.S. entities to file reports. 

Looking Ahead

With the final rule still under development, businesses and practitioners should stay informed about potential changes, as the long-term enforcement of the CTA remains fluid, adapting to shifting political climates.

We will continue to monitor these developments and provide timely updates to help you and your clients stay compliant. 

In a recent update on March 2, 2025, the U.S. Department of the Treasury expanded on FinCEN’s recent decision to halt enforcement of the Corporate Transparency Act (CTA). Over the past few weeks, there have been numerous updates regarding the CTA, and this latest announcement might be the most significant yet.

The department not only reaffirmed that penalties or fines will not be imposed until a new reporting rule is released but also stated that “no penalties or fines will be imposed on U.S. citizens, domestic reporting companies, or their beneficial owners once the forthcoming rule changes take effect.” The Treasury’s press release revealed that the new reporting rule will only target foreign reporting companies. 

Practical Implications

For now, the CTA is effectively on hold again. Although a new reporting rule is expected to be announced and finalized this year, it remains unclear how enforcement of that rule will be implemented. 

It’s important to also note the legal status of the CTA. If courts uphold its constitutionality and Congress does not repeal the law, the CTA will technically remain in effect, even if it isn’t actively enforced. A shift in policy, a change of administration, or changes in enforcement priorities could lead to renewed enforcement of the CTA and its reporting requirements against U.S. citizens and domestic reporting companies. 

Looking Ahead

Given the political uncertainty under the new administration, the future of CTA enforcement remains unclear. Shifts in policy or changes in enforcement priorities could lead to renewed focus on the CTA. While professionals and companies should stay informed as the situation evolves, they may not need to pay as close attention as they have in recent months.  

You can read the full press release from the Department of the Treasury here.  

Today, in yet another development in the Corporate Transparency Act’s (CTA) ongoing legal battles, the judge in Smith v. United States Department of the Treasury issued a stay on the preliminary relief granted to the plaintiffs, which was effectively halting the enforcement of the CTA nationwide. This was the last remaining hurdle preventing the government from enforcing the CTA. With the stay now in place, the government can begin enforcing the CTA and its reporting rule.

This decision follows the Supreme Court’s action on January 25, 2025, when it stayed the nationwide preliminary injunction in the related Texas Top Cop Shop, Inc. v. Garland case.  

What Does This Mean?

Despite these recent developments, the CTA still faces ongoing challenges. Along with the granted extension, FinCEN acknowledged that during this period “it will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks” This indicates that the reach of the reporting rule may be subject to change and/or deadlines may shift. As of now the deadline for filings is set for the majority of reporting companies is March 21, 2025. 

To no surprise of those who have been staying up to date with CTA developments, the situation remains fluid. Last week, the House of Representatives unanimously passed H.R. 736, a bill that has caused some confusion. Some believe it sets a firm reporting deadline of January 1, 2026, for pre-2024 entities, while others interpret it as a “cap” to the deadline at that date, leaving room for FinCEN to set an earlier deadline. The bill still requires Senate approval and the president’s signature. 

Whatever the case, it is crucial to be aware of any changes, as non-compliance fines have now risen to over $600 per day. 

What’s Next?

Despite these developments, while the Corporate Transparency Act is now enforceable, it still faces ongoing legal challenges. The Fifth Circuit is set to hear oral arguments on April 1, 2025, in Texas Top Cop Shop, Inc. v. Garland. A decision from the Eleventh Circuit Court of Appeals in National Small Business United v. U.S. Department of the Treasury also remains looming. Since the Smith case is also being litigated in the Fifth Circuit, if appealed, there is a chance the two cases could be consolidated, potentially leading to further rescheduling of the oral arguments. 

Hopefully, with this decision, we can finally see an end to the whipsaw legal status of the CTA, allowing businesses, business owners, and professionals to better understand what is expected of them—at least in the near future.

With the new administration showing a strong commitment to upholding the CTA, and other rulings in the U.S. in support of the CTA (last week a federal district judge in Maine ruled the CTA likely constitutional) it appears that the Act is here to stay in some form. 

On February 5, 2025, the United States government filed a motion to appeal the nationwide stay on the reporting rule in Smith v. United States Department of the Treasury. The motion was submitted in response to the nationwide stay issued by a federal district court in Texas, which temporarily suspended the enforcement of the Corporate Transparency Act’s (CTA) reporting requirements. 

In its motion, the government contends that the court should reconsider the preliminary relief that includes the nationwide stay on the reporting rule, urging alignment with the United States Supreme Court’s recent decision to lift the stay on the nationwide injunction against the CTA.  

Additionally, the government indicated that, should the stay on the reporting rule be lifted, the Financial Crimes Enforcement Network (FinCEN) plans to issue a 30-day extension to the reporting deadlines presumably from the date the stay is lifted. FinCEN stated it would also consider potential changes to the reporting rule to reduce the burden on “low-risk entities,” although these adjustments would depend on whether the government deems such changes “warranted.”

For professionals assisting clients with Beneficial Ownership Information (BOI) filings, it is important to note that a removal of the stay, coupled with the 30-day extension, could place the new filing deadlines right in the midst of tax season. Firms that have not already done so should begin planning how to allocate sufficient time to gather and collect the necessary information from clients to ensure compliance, in the case the CTA’s reporting rule becomes enforceable.  

Even with the potential repeal of the stay on the reporting rule, the CTA still faces legal challenges. The Fifth Circuit is set to hear oral arguments over the constitutionality of the CTA in Texas Top Cop Shop, Inc. v. Garland on March 25. The complete settlement of this case could come after the initial reporting deadline has passed, including the 30-day extension that would be put in place should the Smith stay be lifted. The government’s decision to appeal the Smith case however is significant, as it underscores the new administration’s commitment to defending the CTA’s constitutionality and its intent to continue addressing the pressing the legal matters left by the previous administration. 

Washington, D.C. — The United States Supreme Court issued a crucial decision granting a stay on the nationwide injunction on the CTA on January 23rd, 2025. The decision, made in relation to case No. 4:24–cv–478 from the United States District Court for the Eastern District of Texas, halts the enforcement of the December 5th, 2024, nationwide injunction.

The application for the stay (24A653), initially presented to Justice Samuel Alito, was granted. The stay will remain in effect pending the outcome of an appeal in the United States Court of Appeals for the Fifth Circuit and the resolution of a potential petition for a writ of certiorari. Notably, Justice Jackson issued the lone dissenting opinion in the case.

This may sound like the CTA is fully enforceable again, placing all businesses that have not yet filed at potential legal risk pending further action, however, it is not this simple due to other existing court cases.

What Does It Mean for the CTA?

Although the Supreme Court’s ruling reinstates the enforcement of the CTA, obstacles remain that continue to prevent full implementation of its requirements. In early January another federal district judge in Texas in Smith v United States Department of The Treasury placed a nationwide stay on the effective date of the reporting rule not the law itself. What does this mean in general terms? The following is guidance straight from FinCEN’s website:

“In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”

Beneficial Ownership Information reports are still currently voluntary despite the Supreme Court’s recent stay.

What’s Next?

While FinCEN has not yet appealed the decision in the Smith case, they are likely to do so. If the appeal is successful and the stay is lifted, the CTA and its reporting requirements could resume in full force. It is important to closely monitor developments in this case, as the removal of the stay may require businesses to file quickly to avoid steep penalties.

The Fifth Circuit Court of Appeals will hear oral arguments in Texas Top Cop Shop, Inc. v. Garland regarding the constitutionality of the CTA, starting March 25, 2025.

UPDATE – January 3rd: The U.S. Supreme Court has engaged with DOJ’s request to stay the injunction against the Corporate Transparency Act.

Justice Alito has established a 4 p.m. deadline on January 10, 2025, for the plaintiffs in Texas Top Cop Shop to respond to the Department of Justice’s motion for a stay. This timeline suggests the Supreme Court is moving quickly to decide whether to reinstate BOI reporting requirements by suspending the preliminary injunction currently blocking enforcement of the Corporate Transparency Act (CTA). 

Late on New Year’s Eve, the U.S. Solicitor General on behalf of FinCEN filed an emergency application for a “Stay” on the injunction issued by the District Court in the Texas Top Cop Shop v. Garland case.

This means that at any time, the U.S. Supreme Court could choose to overturn the current injunction that makes Beneficial Ownership Information Reporting (BOIR) filing voluntary. If this occurs, similar to the roller-coaster that occurred on December 23^rd when the Fifth Circuit Court of Appeals put a stay on the injunction  – the BOIR could once again become mandatory, with an imminent due date for entities formed prior to 2024 (although FinCEN would likely provide a short filing extension to at least January 13^th in that eventuality).

Given all of this uncertainly, the two primary paths forward continue to be as follows:

• Prepare to file your BOIR at a moment’s notice – pending further legal resolution of this high-stakes filing requirement, with the legal system poised to reinstitute the filing requirement at any time.
• File your BOIR voluntarily – ensuring compliance now avoids the crazy roller-coaster with seemingly constant legal developments, combined with last-minute filing stress and possible civil and criminal penalty exposure for missing a filing window.

Ultimately, this reporting requirement is high-stakes, with onerous penalties that include civil fines of up to $591 per day, and criminal fines of up to $10,000 per report paired with up to two years of imprisonment. As such, if you choose to wait to file your BOIR, it is imperative that you monitor this legal battle for future daily developments, and are positioned to file at a moment’s notice.