Treasury Department halts enforcement of Corporate Transparency Act for US businesses
The US Treasury Department has announced a significant shift in its enforcement of the Corporate Transparency Act (CTA).
The agency will no longer require US citizens and domestic businesses to comply with the beneficial ownership information (BOI) reporting requirements, effectively removing a regulation that many small businesses considered burdensome.
Instead, the Treasury plans to limit BOI reporting to foreign reporting companies only.
This move has been welcomed by small business advocates but has also sparked concerns from financial transparency and anti-corruption organizations.
Overview of the Corporate Transparency Act
What is the Corporate Transparency Act?
The Corporate Transparency Act (CTA) was enacted in 2021 to prevent illicit financial activities, such as money laundering, fraud, and tax evasion.
The law required businesses to report their beneficial owners – individuals who directly or indirectly own or control a company – to the Financial Crimes Enforcement Network (FinCEN).
Who was originally required to comply?
The CTA initially applied to an estimated 32.6 million businesses across the US, particularly small and newly formed companies.
Companies that failed to comply faced penalties, including:
- Civil fines of up to $591 per day (adjusted for inflation).
- Criminal fines of up to $10,000.
- Potential imprisonment for up to two years.
Treasury Department suspends enforcement for US businesses
What does the suspension mean?
The Treasury Department’s decision means that:
- No penalties or fines will be enforced against US citizens or domestic businesses that fail to file BOI reports.
- The March 21, 2025, deadline previously set for compliance is no longer applicable to US-based entities.
- The Treasury will issue a proposed rule to limit BOI reporting requirements to foreign reporting companies only.
Why was the rule suspended?
The Treasury stated that this decision is part of an effort to support small businesses and reduce unnecessary regulatory burdens.
Many small business owners had expressed concerns that the BOI reporting rule increased administrative costs and created compliance challenges.
Reaction from the business community
✅ Support from small businesses. Small business groups have praised the suspension, arguing that the reporting requirements were too complex and intrusive for small companies that already struggle with regulatory compliance.
❌ Criticism from financial transparency advocates. Anti-corruption organizations warn that removing these requirements could make the US more vulnerable to financial crimes, as it weakens oversight on shell companies used for illicit activities.
What happens next?
New BOI reporting rules for foreign entities
The Treasury’s upcoming proposed rule will clarify which foreign reporting companies will still need to comply with BOI reporting requirements.
These regulations aim to prevent non-US actors from using anonymous business structures for illegal activities.
Next steps for US businesses
For now, US-based businesses do not need to take any action regarding BOI reporting. However, companies should:
- Stay informed about any future changes to reporting requirements.
- Work with tax and legal professionals to ensure compliance with all other federal regulations.
- Monitor Treasury announcements for details on how the new rules will apply to foreign companies.
Also read – Foreign earned income exclusion - FEIE
Key takeaways
- US businesses are no longer required to file BOI reports under the CTA.
- The Treasury Department will not enforce penalties or fines for non-compliance by domestic companies.
- New reporting rules will apply only to foreign reporting companies.
- While business owners welcome the relief, transparency advocates worry about weakened financial oversight.
- Future rule changes will clarify how foreign companies must comply with BOI reporting requirements.