Corporate Transparency Act Update
Late Sunday evening, March 2, 2025, the Treasury Department announced that it is suspending the enforcement of the imposition of fines and penalties under the Corporate Transparency Act (the “CTA”) against U.S. Citizens and Domestic Reporting Companies. While the enforcement of the CTA will not be pursued against those reporting companies who do not file, compliance with the CTA nevertheless is still required by the applicable extended deadlines – March 21, 2025, for most legal entities. The Treasury Department also stated that it will be issuing proposed rulemaking that will significantly narrow the scope of the reporting requirements to foreign reporting companies only which, if enacted, will substantially lessen the reach of the CTA.
Based on this latest update, which as history suggests, may change, we recommend the following:
- The CTA has not been repealed. Compliance is still required by the applicable extended deadlines.
- For those legal entities that opt not to comply with the reporting requirements (i.e., not file a BOI report), the Treasury Department has stated that it will not enforce the penalties or fines. This, however, may not provide a defense to penalties and fines if the Treasury Department changes course (or is ordered to enforce the CTA).
- Given the uncertain and constantly changing status of the CTA, there is risk for companies that do not file by the deadline.
We are monitoring this evolving issue and anticipate further updates between now and March 21, 2025. We will keep you apprised of the latest developments. Please feel free to reach out to Rich Bar (rbar@gkglaw.com) or Frank Beninato (fbeninato@gkglaw.com) if you have any questions.
