Insights

Corporate Transparency Act Update: FinCEN Suspends Enforcement

By Charles Alovisetti, Bridgette Nikisher

Mar 5, 2025

The Corporate Transparency Act (CTA) has entered a new phase of uncertainty. The U.S. Treasury Department recently announced a temporary suspension of enforcement actions against businesses failing to meet current Beneficial Ownership Information (BOI) reporting deadlines.

Additionally, significant changes aimed at narrowing the scope of the CTA are on the horizon. Here’s what businesses need to know about these developments and how they may impact compliance obligations moving forward.

Treasury Halts CTA Enforcement: What This Means for Businesses

On March 2, 2025, the Treasury Department suspended enforcement of the CTA's BOI reporting requirements. Consequently, companies that fail to submit or update their BOI reports by the March 21, 2025 deadline will not face fines, penalties, or enforcement actions.

The Treasury’s position aligns with a recent statement from the Financial Crimes Enforcement Network (FinCEN), which previously confirmed on February 27, 2025, that it would defer all enforcement actions related to BOI reporting until a new interim final rule (IFR) becomes effective and new reporting deadlines have passed.

As a result, the existing BOI reporting requirements have effectively become voluntary, pending further regulatory updates. This follows FinCEN's earlier extension of the filing deadline announced on February 18, 2025, marking a substantial shift away from previously mandated compliance.

CTA Scope Set to Shrink and U.S. Companies May Be Exempt

In the same press release suspending enforcement, the Treasury Department revealed plans to begin rulemaking via an interim final rule (i.e., an emergency rule that goes into effect immediately upon publication) that would significantly narrow the scope of the CTA by limiting its applicability exclusively to foreign reporting companies. Under this proposed change, U.S. citizens and domestic reporting companies would be exempt from CTA compliance obligations.

The Treasury cited its intention to support “hard-working American taxpayers and small businesses” and to ensure that the regulation is “appropriately tailored to advance the public interest.”

On Truth Social, President Donald Trump applauded the Treasury Department's decision, describing the BOI rule as “outrageous and invasive “ and claiming it has negatively impacted small businesses nationwide. Trump further noted via Truth Social that the Treasury is formally finalizing an emergency regulation to suspend BOI reporting requirements for American companies.

Regulatory Changes Ahead: What to Expect from FinCEN

Before the Treasury Department’s March 2 announcement, FinCEN stated it planned to issue an interim final rule by March 21, 2025. This interim file rule would:

  • Extend current BOI reporting deadlines

  • Provide updated guidance to businesses regarding compliance requirements

  • Solicit public feedback on potential future revisions to the BOI reporting rules

The agency emphasizes its goal is to “minimize the burden on small businesses” while maintaining the value of BOI reporting for national security, intelligence, and law enforcement purposes. However, the Treasury's anticipated decision to narrow CTA applicability exclusively to foreign entities may soon overshadow these planned adjustments.

Congress and Courts Respond to CTA Uncertainty

In related legislative action, the House of Representatives unanimously approved a bill (H.R. 736) proposing an extension of BOI reporting deadlines for existing “small business concerns” to January 1, 2026. A similar measure, bill S.505, remains under review in the Senate. If enacted, entities formed before January 1, 2024 would have until January 1, 2026 to complete their initial BOI reporting.

Constitutional challenges against the CTA are actively proceeding in several federal appellate courts, including the Fourth, Fifth, and Eleventh Circuits. Notably, on December 3, 2024, the U.S. District Court for the Eastern District of Texas (Sherman Division) issued a nationwide preliminary injunction against the enforcement of the CTA and its January 1, 2025 filing deadline. However, the forthcoming regulatory changes from the Treasury Department could impact the motivation and urgency behind continued legal and legislative reform efforts.

What’s Next? Stay Informed on CTA Developments

While enforcement is currently suspended, proactive compliance planning is still recommended in case deadlines are reinstated or modified.

Vicente LLP is closely monitoring these regulatory changes and will continue to provide updates on how they impact businesses. If you have questions about BOI reporting or the Corporate Transparency Act in general, contact our team today to discuss your compliance strategy.

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Bridgette Nikisher, Charles Alovisetti, Corporate & Business, Corporate Transparency Act, CTA