UPDATE: On March 21, 2025, the Financial Crimes Enforcement Network issued an Interim Final Rule removing Beneficial Ownership Information Reporting requirements for U.S. companies and U.S. individuals under the Corporate Transparency Act. For more details, please view our latest alert here.
On March 2, 2025, the U.S. Department of the Treasury (“Treasury” or “the Treasury Department”) announced it will not enforce penalties against U.S. citizens and domestic reporting companies for failure to file Beneficial Ownership Information Reports (“BOIRs”) under existing regulatory deadlines and under forthcoming rule changes expected pursuant to the Corporate Transparency Act (the “Act”). Treasury further announced that it will be issuing “a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.” Although the legal requirement of reporting companies to file BOIRs still exists pending further rulemaking, Treasury’s announcement clarifies that it will not issue fines or penalties against domestic Reporting Companies and their beneficial owners for failure to file.
On February 27, 2025, Treasury’s Financial Crimes Enforcement Network (“FinCEN”) announced that it would not impose penalties on Reporting Companies until a forthcoming interim final rule was effective and new due dates were established. To read more on FinCEN’s announcement, view our previous alert here. Pursuant to that February 27, 2025 announcement, FinCEN’s penalty freeze was only to be in force until the new reporting deadlines in the interim final rule were established. The announcement from the Treasury Department on March 2, 2025 suspends enforcement for these parties entirely.
The guidance of the Treasury Department as it relates to deadlines and enforcement follows scrutiny of the Act on multiple fronts. In April, the Fifth Circuit is set to hear oral arguments on the constitutionality of the Act in the Texas Top Cop Shop case. Additionally, the House of Representatives unanimously passed the Protect Small Businesses from Excessive Paperwork Act, which would extend the reporting deadline for certain reporting companies to January 1, 2026, giving small businesses more time to comply and reducing their regulatory burden. This measure is now pending in the Senate. The Treasury Department’s decision seems to align with mainstream efforts to ease the regulatory burden the Act places on small businesses and make the Act less intrusive. Further, it underscores the Treasury Department’s stated intention to focus the Act’s purview on foreign, and not domestic, businesses.
Although enforcement of the BOIR filing requirements is suspended for U.S. citizens and domestic reporting companies, a legal obligation to file the BOIR remains pending further rulemaking. Failure to file by the deadline will not result in penalties from FinCEN but will leave Reporting Companies out of compliance with federal law, which could have practical implications on their business dealings.
Barley Snyder will continue to follow the Act and all relevant legislative developments closely and provide timely updates as new information is released. If you have any questions regarding this decision or the Act generally, please contact Dan Desmond, Anthony Austin, Caitlin Long, Charmaine Nyman or any member of Barley Snyder’s Business Practice Group.
