In a whirlwind series of announcements, the Treasury Department and FinCEN have suspended all Corporate Transparency Act (CTA) reporting and enforcement for domestic entities indefinitely.
On Feb. 27, FinCEN announced that all reporting and enforcement of the CTA would be suspended until a new reporting rule was finalized. Then, on March 2, the Treasury Department announced the indefinite suspension of CTA reporting requirements. The Treasury Department further stated that it would “not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners” even after the new regulations were issued, and that the new CTA regulations and compliance requirements would apply to “foreign reporting companies only.” President Trump weighed in on social media to celebrate the suspension of the reporting requirements.
The main takeaway is that the previous CTA reporting deadline of March 21 is now suspended and, until a new set of regulations is finalized, CTA beneficial ownership reporting is not required and CTA penalties will not be enforced. As of now, the FinCEN website is still active and accepting beneficial ownership information reports (BOI reports). However, no BOI reports for any entities are required to be filed. The Treasury Department is now reviewing the CTA regulations and preparing a new set of regulations that will only require reporting from foreign reporting companies.
The CTA statute as codified in 31 U.S. Code Sec. 5336 requires beneficial ownership reporting by all domestic and foreign entities registered to do business in the United States unless an entity meets a reporting exemption. The Treasury Department’s role in promulgating regulations under the statute is to implement the CTA. It will require legislative action to permanently change the reporting requirements to only apply to foreign entities. It is possible that the Trump administration will work with Congress to introduce new legislation to limit the application of the CTA to only foreign entities. However, without a change in the statute, CTA reporting requirements and enforcement may reemerge in the future. There are also a number of continuing lawsuits at both the district court and appellate level challenging the constitutionality of the CTA.
Clark Hill’s CTA Task Force will continue to monitor for updates to the CTA and is available to counsel clients on reporting and compliance requirements.
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