In a Sunday evening press release on March 2, the U.S. Department of Treasury declared an indefinite moratorium on any enforcement of the Corporate Transparency Act (CTA) reporting obligations applicable to U.S. companies and its owners announcing that it will "not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners."
In the March 2 press release, the Treasury Department further declared that it intends to issue a proposed rulemaking to narrow the scope of the CTA reporting rule to cover only foreign companies registered to do business in the United States. The upcoming proposed rulemaking should provide more clarity, but the practical upshot of the Treasury Department's March 2 announcement is that all entities formed in the United States are relieved from submitting a beneficial ownership information report or taking other compliance steps under the CTA or CTA-related regulations unless or until contrary definitive (1) guidance is issued by a court or the Treasury Department or (2) legislation is adopted by Congress.
It is possible that a state law enforcement agency or other party could seek to challenge the authority of the Treasury Department's proposed broad non-enforcement approach considering the mandatory reporting text of the congressionally enacted CTA, but millions of U.S. businesses are sure to welcome the relief provided by the Treasury action.
The Treasury Department's March 2 announcement followed a February 27 press release in which the Financial Crimes Enforcement Network (FinCEN), a division of the Treasury Department, announced that the previously extended CTA reporting compliance deadline of March 21 would be further extended as part of FinCEN's forthcoming issuance of a new interim CTA final rule to be issued no later than March 21.
FinCEN's February 27 release further announced a moratorium on any penalties, fines or other enforcement action against reporting companies (presumably including foreign reporting companies) that fail to file beneficial ownership information reports "until a forthcoming interim final rule becomes effective and the new relevant due dates in the interim final rule have passed."
The combined effect of the March 2 Treasury and February 27 FinCEN actions is to limit, for the indefinite future, the companies subject to CTA compliance to non-U.S.-formed entities that have qualified to do business in the United States.
Our CTA Task Force will continue to monitor for relevant developments, with periodic updates accessible on our CTA resource page. If you have any questions or need advice about the CTA or its application to your business, please contact one of the members of the CTA Task Force or your primary Bass, Berry & Sims attorney.
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