Key Takeaways:
- On February 27, 2025, the Financial Crimes Enforcement Network (“FinCEN”) announced that it will not issue any fines or penalties or take any other enforcement actions against reporting companies for failing to file or update beneficial ownership information (“BOI”) reports pursuant to the Corporate Transparency Act (“CTA”) by the current March 21, 2025 deadline.
- No later than March 21, 2025, FinCEN intends to issue an interim final rule that further extends BOI reporting deadlines.
- FinCEN also intends to revise the BOI reporting rule later this year, which may include additional reporting exemptions.
FinCEN has once again changed course on enforcement of the CTA. On February 27, 2025, FinCEN announced that it will not issue any fines or penalties or take any other enforcement actions against reporting companies based on a failure to file or update BOI reports pursuant to the CTA by the current March 21, 2025 filing deadline. Instead, FinCEN will issue an interim final rule by March 21, 2025, which will further extend CTA reporting deadlines to a currently unknown later date.
As previously reported, FinCEN had extended the filing deadline for the vast majority of reporting companies to March 21, 2025, following the decision on February 18, 2025, by the U.S. Federal District Court for the Eastern District of Texas to lift the last remaining nationwide preliminary injunction of the CTA in Smith v. U.S. Department of the Treasury. FinCEN’s announcement marks the seventh change to CTA reporting deadlines and/or its enforceability since December 3, 2024, when the U.S. Federal District Court for the Eastern District of Texas issued a nationwide preliminary injunction blocking enforcement of the CTA in Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland.
On February 27, 2025, FinCEN also stated that it “intends to solicit public comment on potential revisions to existing BOI reporting requirements. FinCEN will consider those comments as part of a notice of proposed rulemaking anticipated to be issued later this year to minimize burden on small businesses while ensuring that BOI is highly useful to important national security, intelligence, and law enforcement activities, as well to determine what, if any, modifications to the deadlines referenced here should be considered.” This proposed new rulemaking may involve the creation of additional reporting exemptions.
Congressional Action
On February 10, 2025, the House of Representatives overwhelmingly passed H.R.736 – “Protect Small Businesses from Excessive Paperwork Act of 2025.” The bill extends the CTA filing deadline to January 1, 2026, but only for reporting companies formed prior to January 1, 2024. The Senate has not yet taken any action on this legislation.
In addition, there are efforts in Congress to repeal the CTA.
Next Steps
Numerous other court challenges to the CTA continue to work their way through various federal district and appellate courts and may ultimately reach the U.S. Supreme Court again. Reporting companies should continue to monitor developments in these cases and in Congress.
Reporting companies should continue to prepare their BOI reports to be able to comply with the forthcoming updated deadlines. Some reporting companies may wish to wait to file until FinCEN issues its interim final rule establishing the new filing deadlines, and to see if there are additional reporting exemptions. Foley Hoag reminds reporting companies that once an initial filing is made, reporting companies assume an ongoing obligation to notify FinCEN of changes to BOI information (once enforcement of the CTA is reinstated).
Clients and reporting companies should stay alert for further updates from Foley Hoag, as additional developments or rulings may impact their compliance obligations under the CTA.
