The still short, but eventful history of the Corporate Transparency Act (CTA) and its controversial beneficial ownership information (BOI) reporting requirements, should have made it predictable that another bend in the road lay ahead. After the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced on February 19 that the BOI requirements under the Corporate Transparency Act were back in effect, with a new reporting deadline of March 21, 2025, FinCEN has now upended that decision.
In a press release issued on February 27, the agency announced that it will not enforce fines or penalties or initiate any other enforcement action in connection with the failure to comply with the CTA’s BOI reporting requirements, and that no related enforcement action will be taken until an imminent interim final rule is issued and the new relevant deadlines under such rule have passed. FinCEN stated in its announcement that it intends to issue, by March 21, an interim final rule extending the BOI reporting deadlines, “recognizing the need to provide new guidance and clarity as quickly as possible, while ensuring that BOI that is highly useful to important national security, intelligence, and law enforcement activities is reported.” The agency indicated that this decision is designed to further the Treasury Department’s commitment to reducing the regulatory burden on businesses, and to focus the BOI reporting requirement on entities that represent the most significant threats to law enforcement and national security. Finally, FinCEN also stated in its announcement that it will solicit public comment on possible changes to the existing BOI reporting requirements and will consider those comments as part of a notice of proposed rulemaking expected to be issued later in 2025, in order to minimize the burden on small businesses while also ensuring that BOI can serve as an important national security, intelligence, and law enforcement tool.
This most recent development concerning the CTA follows a rollercoaster-like litigation history that we have reported on in earlier Law Alerts, listed below. At present, FinCEN’s challenge of a ruling from the District Court for the Eastern District of Texas that the BOI reporting requirements of the CTA violate the Constitution’s Ninth and Tenth Amendments, is pending before the Fifth Circuit Court of Appeals. Should the Fifth Circuit affirm the District Court’s decision, that case could return to the Supreme Court, which previously issued a stay of the District Court’s nationwide injunction against BOI reporting enforcement.
Those business owners that have been holding out for another reprieve, and still have not yet submitted their BOI reports, can breathe a sigh of relief, at least for the moment. While FinCEN’s announcement provides a blanket reprieve for all businesses on any enforcement action related to BOI reporting for the time being, it is clear that there will be certain businesses, those that are deemed to represent a risk to our national security or law enforcement, that will be subject to the CTA’s BOI reporting requirement. Consequently, businesses should continue to monitor developments related to the CTA.
Our prior Law Alerts on this topic are available here:
FinCEN Issues New CTA Beneficial Ownership Reporting Deadline After Court Lifts Nationwide Injunction – February 20, 2025
Corporate Transparency Act Litigation Continues to Induce Whiplash – January 24, 2025
No Rest for the Weary: Department of Justice asks Supreme Court to Issue a Stay of Nationwide Injunction Against Corporate Transparency Act (CTA) – January 2, 2025
Pencils Down: Corporate Transparency Act (CTA) Injunction Back in Effect – December 27, 2024
Fifth Circuit Court of Appeals Lifts Nationwide Preliminary Injunction Against Enforcement of Corporate Transparency Act Pending Ruling on the Merits – December 24, 2024
Texas District Court Issues Nationwide Preliminary Injunction Against Enforcement of Corporate Transparency Act (CTA) – December 4, 2024
FinCEN Beneficial Ownership Reporting Requirements Due by Year End for Many Organizations – November 18, 2024
