Advocacy News – March 7, 2025
What’s happening: After a seemingly endless series of on-again, off-again updates on the controversial Corporate Transparency Act (CTA), it appears the saga may be over.
- On March 2, the U.S. Department of the Treasury issued a news release announcing that it will not enforce any penalties or fines under the Act under existing regulatory deadlines or after forthcoming CTA rule changes take effect.
- On March 3, a Michigan federal district court held that the CTA”s reporting rule is unconstitutional, stating that while the CTA may have been designed with good intentions, its approach exceeds reasonable constitutional limits.
The big picture: The CTA has been subject to myriad legal challenges since it was passed by Congress in 2021. It was intended to make new ownership disclosures to combat financial crime.
- The Treasury announcement also stated that it would be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Consistent with the rest of its announcement, it appears that beneficial ownership reporting requirements will only be enforced against foreign reporting companies that are registered to conduct business in the United States and the beneficial owners of these foreign companies who are not U.S. citizens.
Why it matters: Beneficial ownership information (“BOI”) filings were planned to be mandatory, and the potential penalties for non-compliance harsh.
- With this update, domestic reporting companies and beneficial owners who are U.S. citizens may pause their efforts to report beneficial ownership information to FinCEN and await further updates through the proposed rulemaking process. However, it is advisable to contact legal counsel with questions on your individual situation.
- It appears the scope of the coming rule changes will be applicable to foreign reporting companies only.
Go deeper: Read more on this topic from our friend’s at Butzel.