The Treasury Department and FinCEN announce BOI reporting suspended, indefinitely halting all reporting and enforcement responsibilities under the Corporate Transparency Act (CTA) for domestic companies.
On February 27, FinCEN released a notice that reporting and enforcement under CTA would be suspended until new reporting rules are finalized. Subsequently, on March 2, the Treasury Department went further and stated that it would not only not enforce any penalties associated with Beneficial Ownership Information (BOI) and the CTA under the existing deadlines but will also forego all enforcement for U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either.
The Treasury Department also announced that will narrow the scope of BOI requirements to include foreign reporting companies only. President Donald Trump has expressed his support in having the BOI reporting suspended.
Impact of having the BOI Reporting Suspended
This latest move of having the BOI reporting suspended means that the original March 21 BOI reporting deadline is now fully suspended for domestic companies. As a result, until new rules are finalized, beneficial ownership reporting is no longer required and associated penalties will not be applied.
Despite the fact that the FinCEN site remains open for BOI filings, entities do not need to submit these reports anymore. The Treasury Department is reviewing the CTA regulations and preparing new rules, which will only apply to foreign reporting companies.
Potential Legislative Changes
The CTA, as the term is established at 31 U.S. Code Sec. 5336, mandates reporting of beneficial ownership by foreign and domestic persons that are registered to do business within the U.S., unless otherwise exempt.
Any changes to the present scope will need to be made by the legislature. So, it is possible that the Trump administration could try to work with Congress to amend the provisions.
If it does not do so, the old CTA reporting needs can return one day under a different government.
It is also worth noting that there are continuing court challenges to the constitutionality of the CTA, with cases currently pending in both the district court and appeals courts.
Conclusion
Having the BOI reporting suspended for U.S. citizens and domestic companies marks a significant shift in the enforcement of the Corporate Transparency Act. With the Treasury Department narrowing the scope of reporting requirements to foreign entities, domestic businesses are no longer obligated to file BOI reports, perhaps even after new rules are finalized.
However, given the possibility of legislative amendments or future government changes, reporting obligations could be reinstated at a later date, similar to what happened with the recent nationwide injunction. Additionally, ongoing legal challenges to the CTA may further influence its long-term viability. Businesses should stay informed about regulatory developments to ensure compliance with future requirements.