Key Takeaways
The U.S. Department of the Treasury has suspended enforcement of the Corporate Transparency Act (CTA) for U.S. citizens and domestic reporting companies.
A recent federal court ruling found certain provisions of the CTA unconstitutional.
Treasury will issue a proposed rulemaking to limit the CTA's applicability to foreign reporting companies only.
The move is intended to support American small businesses and taxpayers while ensuring the rule remains in the public interest.
Businesses should monitor developments as the Treasury evaluates the court decision and refines regulatory guidance.
What Happened?
On March 2, 2025, the U.S. Department of the Treasury announced that it is suspending enforcement of the Corporate Transparency Act (CTA) for U.S. citizens and domestic reporting companies. This decision follows a recent federal court ruling that found key provisions of the CTA unconstitutional.
In addition to pausing enforcement, Treasury has also indicated that it will issue a proposed rulemaking to narrow the scope of the CTA, applying it only to foreign reporting companies. Treasury emphasized that this step aligns with its commitment to supporting small businesses and ensuring a properly tailored regulatory framework.
What This Means for Your Business
This development temporarily halts CTA compliance obligations for many domestic entities that were previously required to report beneficial ownership information (BOI) under the CTA's requirements. However, the Treasury's forthcoming rulemaking will determine the long-term implications of these changes.
Immediate Considerations:
- Pause on Enforcement: Domestic reporting companies no longer need to submit beneficial ownership reports until further regulatory guidance is issued.
- Foreign Companies Still Affected: If the proposed rule proceeds as planned, only foreign reporting companies will remain subject to CTA requirements.
- Future Changes Expected: While this suspension is a significant shift, the Treasury may implement alternative reporting requirements or modifications in response to the court's ruling.
Next Steps
- Monitor Treasury Announcements: The proposed rulemaking process could introduce new compliance obligations.
- Review Entity Structures: Businesses with international components should assess whether they may remain subject to the CTA under the revised framework.
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