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March 24, 2025
The Corporate Transparency Act (CTA) was originally described as a groundbreaking effort to crack down on money laundering, terrorism financing and other illicit financial activities by requiring small businesses to disclose their true, beneficial owners to the Financial Crimes Enforcement Network (FinCEN).
The law was intended to pull back the curtain on anonymous shell companies and strengthen corporate accountability.
However, instead of ushering in a new era of transparency, the CTA has been mired in legal challenges, enforcement uncertainty and shifting deadlines – leaving business owners across the country questioning what, if anything, they need to do next.
Enforcement on hold – for now
On March 2, 2025, the Treasury Department declared that it will not enforce the CTA’s reporting requirements against U.S. citizens, domestic reporting companies or their beneficial owners.
The agency further indicated that it will issue a proposed rule that narrows the scope of BOI (beneficial ownership information) reporting to foreign-reporting companies only.
This follows a Feb. 27, 2025, FinCEN notice, which stated that no penalties or fines would be imposed on businesses failing to meet the CTA’s existing March 21, 2025, deadline.
This decision effectively suspends CTA enforcement for most U.S. entities that were previously subject to BOI reporting, at least for the foreseeable future.
The move comes after a flurry of legal challenges and regulatory uncertainty that has left business owners confused about their compliance obligations.
Regulatory whiplash
The CTA officially took effect Jan. 1, 2025, giving newly formed businesses just 90 days to file their BOI reports.
However, businesses quickly found themselves caught in a legal and regulatory tug-of-war, as court challenges and government responses created a confusing and unpredictable compliance landscape.
In early February 2024, a federal court in Alabama issued an injunction blocking enforcement of the CTA – but only for the plaintiffs in that case – citing constitutional concerns.
Despite this, FinCEN proceeded with implementing the rule, launching its reporting system in December 2024.
By the time the law officially went into effect in January 2025, businesses were still uncertain about their obligations.
In December 2024, a federal court in Texas issued a nationwide injunction, halting the CTA’s enforcement entirely.
That relief, however, was short-lived.
By mid-February 2025, the injunction was lifted, restoring reporting requirements.
Shortly afterward, however, FinCEN reaffirmed the March 21, 2025 compliance deadline but acknowledged the continued legal uncertainty surrounding enforcement.
Then, in a rapid shift, FinCEN backpedaled.
On Feb. 27, 2025, the agency announced that it would not impose penalties for missed deadlines and suggested that a rule change extending the deadline was forthcoming.
Just days later, on March 2, 2025, the Treasury Department took an even more drastic step – announcing a complete halt to CTA enforcement for U.S. businesses and proposing that BOI reporting apply only to foreign entities.
Meanwhile, legal challenges continued.
On March 3, 2025, a federal court in Michigan ruled the CTA unconstitutional, citing Fourth Amendment concerns.
That same day, a Utah court withdrew a pending injunction request, recognizing the Treasury Department’s suspension of enforcement.
As Congress now debates potential legislative changes, some lawmakers are pushing to repeal the law altogether, while others seek modifications to limit its impact on small businesses
What this means for businesses
For now, U.S. businesses that have not yet filed their initial, updated or corrected BOI reports may consider pausing compliance efforts while waiting for further guidance.
The CTA remains in legal limbo, and additional court rulings or legislative actions could either restore, modify or permanently curtail its reporting requirements.
However, foreign entities registered to do business in the U.S. should continue monitoring CTA developments closely, as enforcement may still apply to them.
FinCEN has indicated that forthcoming rule changes will likely focus on international financial transparency, shifting the burden away from domestic companies.
Where does the CTA go from here?
The Treasury Department has stated that new rulemaking is forthcoming, which will redefine the scope of the CTA.
Congress is also considering legislative responses, with some lawmakers pushing for an extension of compliance deadlines, and others advocating for a complete repeal of the law.
Though the current administration has suspended enforcement, future administrations or legal decisions may restore reporting obligations, potentially retroactively.
Businesses should not assume that the CTA is gone for good, as its core provisions still have bipartisan support in Washington.
Businesses should stay informed, track regulatory updates and consult with legal counsel before making any final decisions regarding compliance.
For now, with Treasury’s enforcement pause in place, there is no immediate penalty risk for non-compliance – but that could change quickly depending on future legal or legislative action.
