As you may have seen, Sunday night the Treasury Department announced the suspension of the enforcement of the Corporate Transparency Act against U.S citizens and domestic reporting companies.
We have closely followed this issue and paused our announcement of this news to watch the dust settle.
Here is what we know:
After weeks of speculation by members of the business bar, the Trump Administration has finally stated its position on the Corporate Transparency Act. Many of our colleagues around the nation in the business law bar have been trying to discern the President’s position given the filings of various lawsuits. He made his position clear in a post on X which stated:
“Exciting news! The Treasury Department has announced that they are suspending all enforcement of the outrageous and invasive Beneficial Ownership Information (BOI) reporting requirement for U.S. Citizens…”
Now we know his position.
The risk of not filing the BOI forms with FinCEN appears to now be minimal for U.S. citizens and domestic reporting companies.
Litigation on this legislation continues in several courts.
On Monday, the U.S. District Court for the Western District of Michigan declared that the Corporate Transparency Act violates the Fourth Amendment to the United States Constitution stating in part:
The CTA may have good intentions but the road it chooses to pursue them paves over all reasonable limits. The CTA’s reporting requirements reach indiscriminately across the smallest players in the economy to extract and archive a trove of personal data explicitly for future law enforcement purposes at an expected cost to the reporting players of almost $22 billion in the first year alone. The Fourth Amendment prohibits such an unreasonable search.
It compels citizens to disclose private information they are not required to disclose anywhere else just so the government can sit on a massive database to satisfy future law enforcement requests. It does so at a cost of billions of dollars to the citizens least likely to afford it. It amounts to an unreasonable search prohibited by the Fourth Amendment.
On the other hand, other stakeholders continue to promote the Corporate Transparency Act. The executive director of the FACT Coalition (Financial Accountability & Corporate Transparency Coalition) issued a press release Monday, stating:
“With one tweet, the Administration has contradicted fifteen years of bipartisan work by Congress to end the scourge of anonymous shell companies – which are a favorite tool of our nation’s global adversaries and criminals including fentanyl traffickers, money launderers, and tax cheats”
For now, voluntary compliance is still available.
FinCEN has stated its intention to review the law and review the rules promulgated under the law.
To be clear, the early court cases and early Department of Treasury announcements dealt only with reporting entities formed before January 1, 2024. Entities formed after January 1, 2025 were not addressed, until now. The recent FinCEN non-enforcement announcement covered those entities as well.
Remember, reporting is still voluntarily available.
Please contact us if you have any questions.