Dear Clients,
We wish to update you on the latest developments concerning the Corporate Transparency Act (“CTA”), specifically related to the beneficial ownership information (“BOI”) reporting requirements. Here are the key updates as of March 2025:
1. Implementation of the Corporate Transparency Act (CTA) to Resume
Last month the Federal District Court for the Eastern District of Texas put on hold its nationwide injunction that had been in place in the matter of Smith v. U.S. Department of the Treasury. This injunction was the only remaining obstacle to the government’s implementation of the CTA’s BOI reporting requirements. This action by the Court in Texas means that CTA filing requirements are again in effect.
The Financial Crimes Enforcement Network of the U.S. Department of the Treasury (“FinCEN”), the bureau charged with coordinating and enforcing the CTA has advised that, “[f]or the vast majority of reporting companies, the new deadline to file an initial, updated, and/or corrected BOI report is now March 21, 2025. However, in a further update late last month, followed by a press release from the U.S. Department of the Treasury (“Treasury”) earlier this month, it was announced that FinCEN will not issue fines or penalties or take enforcement actions based on a reporting company’s failure to file or update BOI reports until a forthcoming interim final rule becomes effective. The announcement from Treasury added that Treasury would not enforce any fines or penalties against U.S. citizens or domestic reporting companies or their beneficial owners, even after the forthcoming rule changes take effect.
In light of these changes:
- Reporting companies that were formed prior to January 1, 2024 that have not filed an initial BOI report will have until March 21, 2025 to comply with the CTA’s filing requirements.
- The announcements from Treasury and FinCEN state that the BOI filing requirement will be further amended – and possibly eliminated with respect to domestic reporting companies and their beneficial owners, but the rulemaking implementing this change has not been published.
- We are updating our prior options/recommendations for clients as follows: Corporations, limited liability companies, and other entities that qualify as reporting companies (this is the vast majority of companies) and who have not yet filed a BOI report (or who need to update a previously filed BOI report) should prepare and plan to file their initial (or updated) BOI reports on or before March 21, 2025, the deadline currently published by FinCEN, understanding that both Treasury and FinCEN have proposed to issue a new rule extending the BOI reporting deadlines (and possibly limiting the number of companies and individuals who would be required to file such reports).
- Note: Updates to previously filed BOI reports typically are required when information previously reported to FinCEN changes or there is a change in the company’s beneficial owners or information about existing beneficial owners or the reporting company.
2. House of Representatives Passes Protect Small Business from Excessive Paperwork Act
Last month the U.S. House of Representatives passed the Protect Small Business from Excessive Paperwork Act. The Act proposes to extend one of the deadlines for BOI reporting to January 1, 2026, effectively providing businesses formed before January 1, 2024 additional time to comply with reporting requirements. The Act aims to reduce the regulatory burden on small businesses by delaying the reporting obligations and streamlining compliance processes. This proposed legislation is now under consideration in the Senate Committee on Banking, Housing, and Urban Affairs.
3. Reintroduced Legislation to Repeal the CTA
Other lawmakers have reintroduced legislation (H.R. 425, the Repealing Big Brother Overreach Act) seeking to fully repeal the Corporate Transparency Act. This new bill challenges the CTA’s implementation by raising concerns over privacy and the administrative burdens it places on businesses. The reintroduced legislation has not advanced since introduction in January, but will be closely watched, as it could significantly alter the landscape of future BOI reporting requirements.
As before, we will continue to monitor the situation and provide updates as new developments arise.
As always, please do not hesitate to reach out if you have questions about the CTA or any other legal matters or if you would like to discuss your preferred course of action.
Sincerely,
McMillan Metro Faerber, P.C.
Corporate & Business Law Practice Group
