Fast-Moving CTA Rule Changes Favor Domestic Companies and Owners

As you might have seen, there have been several developments in recent weeks with the Corporate Transparency Act (CTA) and its Beneficial Ownership Interest (BOI) reporting requirements. The news has been moving so fast that it’s been difficult for some publications to keep up. So, we’ll lead with the most recent news and the news you’re definitely going to want to hear: As of March 2, the U.S. Department of Treasury announced that they will no longer be enforcing the CTA or the BOI reporting requirements against U.S. citizens or against domestic reporting companies and their beneficial owners. Going forward, the CTA will only be enforced against foreign reporting companies.

To summarize, going forward, only foreign reporting companies will be subject to CTA enforcement. As a reminder, even for foreign companies, enforcement is currently suspended while we await the new rule from the Financial Crimes Enforcement Network, the branch of the Department of Treasury responsible for enforcing the CTA (FinCEN). The language of the announcement leads us to believe that U.S. citizens who are beneficial owners of foreign reporting companies will be safe from enforcement against them individually, but that fines and penalties may still be enforced against the foreign if they don’t comply with the reporting requirements once FinCEN reinstates them.

We know that the constant back-and-forth with the CTA has been incredibly confusing, and it may be difficult to understand how we got here. If you are interested, we have compiled below a brief timeline of the recent CTA developments.

Since its inception, the CTA’s enforcement and validity has been a very fluid situation. However, with respect to U.S. citizens and U.S. companies, we expect this decision to be final, at least under the current legislation. Still, there are further rules expected regarding foreign reporting companies. We will continue to stay informed on all further developments regarding the CTA and inform you of any relevant changes.

While the CTA’s reporting requirements were certainly overly burdensome on businesses, regularly taking a thorough look at your business and its structure is a great habit to develop. Doing this can help you catch outdated contract provisions, missing corporate filings, and business inefficiencies generally. The attorneys at Isaac Wiles are well-versed on the issues facing businesses in the modern corporate landscape and stay ready to assist you with any problem your business may have.

If you have any questions at all relating to the ongoing obligations for foreign reporting companies, questions about these recent changes  to the CTA and BOI enforcement generally, or would like assistance with any issues facing your business, please reach out to Andrew Allman at aallman@isaacwiles.com at any time and he will be happy to assist you.

Recent CTA Legal Timeline

• December 26, 2024: The Fifth Circuit Court of Appeals reinstated an injunction of the CTA’s BOI reporting requirements. (This temporarily suspended CTA enforcement.)
• February 10, 2025: The House of Representatives unanimously passed a bipartisan bill that would, among other things, give most entities until January 1, 2026 to submit their BOI reports. A companion bill was introduced in the Senate a day later, but has not received bipartisan sponsorship or been voted on as of yet. (This did not change anything yet. Until the bill is passed by both the House AND the Senate, it cannot become law.) 
• February 18: The Eastern District Court of Texas agreed to stay its previous order that suspended the BOI reporting requirements under the CTA until the Department of Justice’s appeal had been heard. (This was effectively reinstating the CTA enforcement.) 
• February 19: FinCEN issued a notice that nearly all entities would have until March 21, 2025 to comply with BOI reporting requirements. (This established a March 21 filing deadline.) 
• February 27: FinCEN announced that they will not issue fines or penalties for entities that don’t file by the March 21 deadline. As part of what they call a “commitment to reducing regulatory burden on businesses”, FinCEN also announced that they will issue a new BOI reporting rule by March 21 – which will very likely set another new reporting deadline. (This effectively suspended enforcement of the CTA until FinCEN announces their new rule.) 
• March 2: The Department of Treasury announced that it will no longer enforce any fines or penalties against U.S. citizens, or against domestic reporting companies and their beneficial owners. They are narrowing the scope to target foreign reporting companies and will be announcing a new reporting rule on that front soon. The forthcoming new rule referenced in the above bullet will now only apply to foreign companies. (This halted CTA enforcement against citizens and domestic companies; the new rule for foreign companies is still expected to come by March 21.)