Key Takeaways:
- On February 27, 2025, the Financial Crimes Enforcement Network ("FinCEN") announced that it will not issue any fines or penalties or take any other enforcement actions against reporting companies for failing to file or update beneficial ownership information ("BOI") reports pursuant to the Corporate Transparency Act ("CTA") by the current March 21, 2025 deadline.
- No later than March 21, 2025, FinCEN intends to issue an interim final rule that further extends BOI reporting deadlines.
- FinCEN also intends to revise the BOI reporting rule later this year, which may include additional reporting exemptions.
FinCEN has once again changed course on enforcement of the CTA.
On February 27, 2025, FinCEN announced that it will not issue any
fines or penalties or take any other enforcement actions against
reporting companies based on a failure to file or update BOI
reports pursuant to the CTA by the current March 21, 2025 filing
deadline. Instead, FinCEN will issue an interim final rule by March
21, 2025, which will further extend CTA reporting deadlines to a
currently unknown later date.
As previously reported, FinCEN had extended the filing
deadline for the vast majority of reporting companies to March 21,
2025, following the decision on February 18, 2025, by the U.S.
Federal District Court for the Eastern District of Texas to lift
the last remaining nationwide preliminary injunction of the CTA in
Smith v. U.S. Department of the Treasury. FinCEN's
announcement marks the seventh changeto CTA reporting deadlines
and/or its enforceability since December 3, 2024, when the U.S.
Federal District Court for the Eastern District of Texas issued a
nationwide preliminary injunction blocking enforcement of the CTA
in Texas Top Cop Shop, Inc. v. McHenry—formerly,
Texas Top Cop Shop v. Garland.
On February 27, 2025, FinCEN also stated that it "intends to
solicit public comment on potential revisions to existing BOI
reporting requirements. FinCEN will consider those comments as part
of a notice of proposed rulemaking anticipated to be issued later
this year to minimize burden on small businesses while ensuring
that BOI is highly useful to important national security,
intelligence, and law enforcement activities, as well to determine
what, if any, modifications to the deadlines referenced here should
be considered." This proposed new rulemaking may involve the
creation of additional reporting exemptions.
Congressional Action
On February 10, 2025, the House of Representatives overwhelmingly
passed H.R.736 – "Protect Small Businesses from
Excessive Paperwork Act of 2025." The bill extends the CTA
filing deadline to January 1, 2026, but only for reporting
companies formed prior to January 1, 2024. The Senate has not yet
taken any action on this legislation.
In addition, there are efforts in Congress to repeal the CTA.
Next Steps
Numerous other court challenges to the CTA continue to work their
way through various federal district and appellate courts and may
ultimately reach the U.S. Supreme Court again. Reporting companies
should continue to monitor developments in these cases and in
Congress.
Reporting companies should continue to prepare their BOI reports to
be able to comply with the forthcoming updated deadlines. Some
reporting companies may wish to wait to file until FinCEN issues
its interim final rule establishing the new filing deadlines, and
to see if there are additional reporting exemptions. Foley Hoag
reminds reporting companies that once an initial filing is made,
reporting companies assume an ongoing obligation to notify FinCEN
of changes to BOI information (once enforcement of the CTA is
reinstated).
Clients and reporting companies should stay alert for further
updates from Foley Hoag, as additional developments or rulings may
impact their compliance obligations under the CTA. For more
information on the CTA, reporting companies can visit Foley
Hoag's CTA resource center here, or reach out to one of the contacts
listed below.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
