On March 2, 2025, the U.S. Treasury Department announced a substantial shift in the enforcement of the Corporate Transparency Act (“CTA”). According to the Treasury’s official press release, it will not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners. More importantly, the CTA’s beneficial ownership reporting requirements will now apply exclusively to foreign reporting companies.
In its statement, the Treasury Department clarified:
“The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.”
This change is a response to ongoing litigation with the goal of reducing the regulatory burden on American small businesses. It represents a significant departure from the previous CTA requirements, which would have impacted an estimated 32.6 million U.S. businesses.
For a complete history of the CTA and prior court rulings, you can review our previous alerts:
- Texas Blocks Enforcement of Corporate Transparency Act
- Corporate Transparency Act Enforcement Resumes
What Does This Mean for U.S. Businesses?
The Treasury Department’s announcement effectively removes the reporting obligations for domestic U.S. businesses under the CTA. This is a significant relief for small businesses that would have been required to file detailed beneficial ownership information with the Financial Crimes Enforcement Network (“FinCEN”).
- No Immediate Action Needed: U.S. businesses previously preparing for the March 21, 2025, deadline can now pause compliance efforts.
- Foreign Companies Remain Affected: The CTA’s reporting requirements will still apply to foreign reporting companies, aligning the rule with its original intent to combat illicit financial activities by increasing transparency of foreign entities operating in the U.S.
Maintaining Compliance Amid Changing Regulations
While U.S. businesses are no longer required to comply with the CTA’s reporting requirements, the Treasury’s proposed rulemaking is still forthcoming. During this time, businesses should:
- Stay Informed: Monitor the Treasury Department and FinCEN for updates on the proposed rulemaking.
- Evaluate Impact: Foreign companies operating in the U.S. should prepare for compliance updates and review their beneficial ownership records.
- Consult with Legal Advisors: Ensure that business practices align with the evolving regulatory environment.
Impact of Corporate Transparency Act Reporting Limitations
The Treasury’s decision to limit the CTA’s applicability to foreign reporting companies reflects a shift toward a more targeted regulatory approach. For most U.S. businesses, this change eliminates the immediate compliance burden, while foreign companies must remain prepared for upcoming reporting obligations.
ByrdAdatto Can Help You Navigate the Corporate Transparency Act
At ByrdAdatto, we help our clients navigate the complexities of compliance and business operations by providing timely updates on regulatory changes. Contact ByrdAdatto for guidance on these changes.
