The United States Treasury Department announced on March 2, 2025, that the Beneficial Ownership Information (BOI) reporting required by the Corporate Transparency Act (CTA) is now voluntary for U.S. entities and citizens.
The updated reporting deadline, March 21, 2025, will no longer be enforced against U.S. citizens or entities formed in the U.S., and no fines or penalties will be levied until a forthcoming interim final rule takes effect. We are waiting for publication of the interim final rule. Treasury confirmed that it will narrow the CTA’s scope to apply solely to foreign reporting companies. However, it is possible that domestic entities with foreign ownership may still be required to report following the new rulemaking.
While the CTA remains in effect, the risk of enforcement for domestic entities is all but gone for now. However, if a reporting company chooses not to file their BOI report, then the company risks a technical default under their commercial contracts or organizational documents if the company is obligated to comply with the CTA in its current form.
Resulting Landscape for Reporting Companies
The key takeaways now are:
- The current March 21 deadline that applies to most reporting companies will be pushed back.
- The Financial Crimes Enforcement Network (FinCEN), the body charged with enforcement of the CTA, will not issue fines or penalties or take other enforcement actions against any companies for failure to meet the March 21 deadline. Fines and enforcement are on hold until after the forthcoming rule change and deadline extension.
- Even after the forthcoming rule change and deadline extension, the CTA will not be enforced against domestic entities (entities formed under the laws of any U.S. state), beneficial owners of domestic entities or U.S. citizens.
- Failure to file a report by the March 21 deadline (or later deadline for certain entities impacted by natural disasters) does constitute noncompliance with the CTA, even though there will not be enforcement. This noncompliance may result in disclosure obligations or other compliance-related issues for failure to comply with a law.
- Foreign reporting companies — entities formed under the laws of a jurisdiction outside the U.S. that have filed with one or more U.S. states for authority to conduct business in the U.S. — are likely to have BOI reporting obligations under the CTA even after the pending rule change takes effect. Foreign companies may choose to report on or before the March 21 deadline to avoid technical noncompliance even though Treasury and FinCEN will not take enforcement action until a rule change and later deadline take effect. Alternatively, foreign reporting companies may choose to wait to see the text of the rule change and determine the new deadline that will apply.
