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Keep up to date with legislative changes that can impact your business with our resident Tax Attorney and Blogger Tina Azarvand. Here she shares changes to the Corporate Transparency Act.
The Corporate Transparency Act's (CTA) Beneficial Ownership Information (BOI) reporting requirements are now suspended for both U.S. citizens and domestic reporting companies. In a significant policy shift, the Treasury Department announced on March 2, 2025, that it "will not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners" — effectively relieving American business owners and citizens from the burden of these regulations. This article explores the latest CTA developments and what they mean for your salon or small business, providing a sense of relief and reassurance.
Foreign businesses should take note that they will remain subject to BOI reporting requirements. As the Treasury Department stated in its March 2nd release, they will be "issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only." This represents a targeted approach to focus on international financial transparency while relieving U.S. citizens and domestic businesses of the administrative burden.
Staying informed about the latest developments in the CTA is crucial. The information provided in this article is current as of March 14, 2025, but is subject to change as legal developments unfold. For the most up-to-date information about BOI reporting requirements, we strongly encourage business owners to monitor updates directly by visiting FinCEN.gov. Proactive engagement with these changes is key to ensuring compliance with state laws and staying ahead of the curve.
What is the Corporate Transparency Act?
The CTA was designed to combat illicit financial activity by requiring certain businesses to report information about their "beneficial owners" (individuals who own or control the business) to the Financial Crimes Enforcement Network (FinCEN). The law initially applied to most corporations, LLCs, and similar entities, with domestic businesses facing changing deadlines that left many business owners feeling like they needed a complete regulatory makeover.
What This Means for Your Business
Treasury's announcement means the previously announced March 21, 2025, deadline for existing businesses to file their BOI reports has been effectively eliminated for U.S. citizens and domestic entities. While the filing remains voluntary, there is no longer any federal enforcement mechanism or penalties for non-filing.
State-Level CTA Requirements
Many states have active or pending beneficial ownership legislation, including (but not limited to) New York, California, Delaware, Illinois, Washington, Maryland, Massachusetts, and Colorado. Business owners should consult with legal professionals regarding these state-specific requirements, as they may require a different treatment plan than the federal approach.
Timeline of Recent CTA Developments
December 3, 2024: Texas district court (in the "Texas Top Shop case") issues nationwide injunction halting CTA reporting requirements.
December 10, 2024: FinCEN announces companies are not subject to liability if they do not file by January 1, 2025.
December 23, 2024: 5th Circuit Court grants emergency motion lifting the nationwide injunction.
December 24, 2024: FinCEN extends the CTA deadline to January 13, 2025.
December 26, 2024: The 5th Circuit vacates its own stay, reinstating the preliminary injunction.
December 27, 2024: FinCEN announces no deadline is being enforced due to an ongoing court order.
January 23, 2025: The U.S. Supreme Court grants the government's motion and lifts the nationwide injunction.
January 24, 2025: Despite the Supreme Court ruling, a separate injunction in Smith vs. U.S. Dept of Treasury remained in effect.
February 5, 2025: U.S. Department of Treasury files a notice of appeal against the Smith injunction.
February 18, 2025: U.S. District Court grants stay of the second injunction, allowing full enforcement of CTA.
February 19, 2025: FinCEN establishes March 21, 2025, as the deadline to file BOI Reports.
February 27, 2025: FinCEN announces it will not enforce the BOI reporting deadline, with revisions to deadlines coming.
March 2, 2025: Treasury announces it will not enforce penalties against U.S. citizens or domestic reporting companies.
Looking Ahead
While the requirements for beneficial ownership are currently suspended at the federal level for U.S. citizens and domestic businesses, the regulatory landscape for beneficial ownership continues to change, as in seasonal trends. The Treasury Department's forthcoming rules will likely maintain requirements for foreign entities and non-U.S. citizens doing business in the U.S., while state-level transparency requirements may still color your business operations.
According to AICPA's Melanie Lauridsen, "For now, we don't need to worry about the March 21 deadline. This is good news, and we need to stay tuned for more information from FinCEN." The AICPA has raised concerns about the "unnecessarily tight 30-day timeline for report amendments and changes," noting that tax professionals would typically learn about ownership changes during annual meetings before tax filing.
This period allows you to review and style your business documentation, highlighting your ownership records and establishing systems for tracking beneficial ownership information to ensure you maintain a polished look with applicable state laws.
Understanding and preparing for these various requirements can be complex, but you don't have to navigate this process alone. Have an open issue with the IRS or FinCEN? You can book a complimentary 30-minute consultation online at AzarvandTaxLaw.com or by sending us an email at Info@AzarvandTaxLaw.com.
Remember, while federal enforcement is suspended for U.S. citizens and domestic entities, staying perfectly coiffed on federal and state requirements is the best strategy for protecting your business and ensuring regulatory compliance remains in style.
About the Author: Tina Azarvand is a Tax Attorney and is the founder of Azarvand Tax Law. She assists businesses with preventing, defending, and resolving tax controversies with the IRS and local taxing authorities. In 2023 and 2024, she was selected to the SuperLawyers: Rising Stars list, a distinction that less than 2% of attorneys receive.
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