U.S. DEPARTMENT OF TREASURY SUSPENDS ENFORCEMENT OF CERTAIN FINES AND PENALTIES UNDER THE CTA

In a news release issued on March 2, the U.S. Department of Treasury announced that it will discontinue enforcement of penalties and fines under the Corporate Transparency Act’s (“CTA”) current beneficial ownership information reporting rule with respect to U.S. citizens, domestic reporting companies, and their beneficial owners. However, the reporting requirements will remain in effect for foreign reporting companies. The Treasury Department noted that new reporting rules would be issued to reflect the revised scope of the CTA. It is currently unclear when the new reporting rules will be issued.

This announcement follows numerous legal challenges to the CTA, some of which remain ongoing. Despite the Treasury Department’s announcement, legislative efforts in both the U.S. House and Senate to reduce the scope of the CTA are expected to continue as well. The new announcement from the Treasury Department provides many business owners with a sense of relief, with Treasury Secretary Scott Bessent calling it a “victory for common sense.” While this announcement is a significant step in alleviating the reporting burden for many U.S. reporting companies, business owners should exercise cautious optimism when evaluating their own reporting obligations.

Consistent with the Treasury Department’s announcement, domestic reporting companies may pause their compliance efforts with the reporting requirements under the CTA until the new reporting rules are released. Foreign reporting companies, however, should continue to comply with the reporting requirements currently in effect. All business owners, including those who own domestic reporting companies, should reassess their reporting obligations under the CTA when the new reporting rules are issued.

Like prior developments with the CTA, this situation continues to evolve, and business owners are encouraged to monitor further developments. Please contact any member of the Rhoades McKee Business & Corporate Law Team if you have questions regarding your obligation to comply with the requirements of the CTA.