Corporate Transparency Act Takes New Twist

The Corporate Transparency Act’s rollercoaster ride took a new twist March 2, with the U.S. Treasury Department announcing it will not enforce the act or its reporting requirements.

In a statement, the agency said it “will not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines.”

“It 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 statement noted.

Treasury officials plan on issuing a proposed rule that will narrow the CTA’s scope 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,” the statement noted.

Injunctions, Court Actions

The department’s announcement punctuated a dizzying series of injunctions and court actions, culminating in a federal judge’s reversal in February of an earlier national injunction.

Following that reversal, Treasury’s Financial Crimes Enforcement Network extended the law’s filing deadline for most companies to March 21.

FinCEN added that it would not issue penalties or fines or take enforcement actions over noncompliance before that deadline.

Treasury’s announcement punctuated a dizzying series of injunctions and court actions

Treasury’s March 2 announcement means that while the CTA technically remains a statute, there is no enforcement.

The act, which took effect Jan. 1, 2024, required most companies incorporated in—or operating in the U.S.—to report stakeholder information to FinCEN.

The law was likely to impact approximately 32.6 million small and medium-sized businesses, with compliance costs expected to exceed $22 billion in the first year.

As FinCEN is expected to revise the scope of the existing rules in the coming months, covered companies are advised to continue monitoring the issue.