In the past year, you may have heard discussions about the Corporate Transparency Act (CTA) and its Beneficial Owner Information Reporting Requirements. The law required businesses to report ownership details, including verified IDs and contact information, to the U.S. Treasury Department. However, recent developments have significantly changed the enforcement landscape.
Over the weekend, the U.S. Treasury Department announced that it will not seek enforcement of the Corporate Transparency Act against U.S. businesses. So, what does this mean for small business owners?
Understanding the Corporate Transparency Act
The CTA was introduced as part of an effort to combat money laundering, terrorist financing, and other financial crimes. It aimed to create transparency in corporate ownership by requiring businesses to disclose beneficial ownership information to the government.
Key provisions of the law included:
- Mandatory reporting of company ownership to the Treasury Department
- Strict penalties of $500 per day for non-compliance
- A filing deadline of March 1, 2025, which had already been postponed multiple times due to ongoing legal challenges
However, the law faced significant pushback, especially from small business owners who saw it as overly invasive and burdensome. Critics argued that the broad scope of the law would impact businesses that were never the intended target.
Treasury Department Announces Non-Enforcement
In response to numerous legal challenges, the Treasury Department announced that it will not enforce the CTA against U.S. entities. This means that if you are a small business owner who has not yet filed, you are no longer required to do so.
Instead, the Treasury Department is working on new rulemaking to narrow the law’s scope, focusing only on foreign companies operating in the U.S.. If you are a foreign corporation, you are still subject to the law and required to report ownership details.
What Should Small Business Owners Do?
If You Haven’t Filed:
You’re off the hook—for now. There is no requirement to submit your company’s ownership details to the U.S. Treasury at this time.
If You Already Filed:
No action is needed. Your records will remain with the Treasury Department, and there’s no penalty for having filed.
Looking Ahead:
The Financial Crimes Enforcement Network (FinCEN) has announced that it will issue an interim rule before March 21, 2025, to extend reporting deadlines and clarify new guidelines. We recommend keeping an eye on further developments, as regulations may change.
The Future of Corporate Transparency Laws
The CTA was designed with good intentions—to combat financial crime and improve corporate transparency. However, its broad reach and complex requirements made compliance challenging for small businesses.
While the current administration appears to be shifting focus away from enforcement, the issue of corporate secrecy laws in the U.S. remains a topic of debate. It’s possible that Congress may revisit these regulations in the future, though whether they will take a similar approach remains uncertain.
For now, this is good news for small business owners. If you were worried about complying with the Corporate Transparency Act, you can breathe easy—there is no enforcement at this time.
Stay informed, and if you have any questions about your business’s legal requirements, reach out to McCutchen Vaught Geddie & Hucks, P.A.—your lawyers at the beach.