On February 27, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced that it is ceasing enforcement of the Corporate Transparency Act (CTA) while it crafts a new set of regulations that will ultimately narrow the scope of the reporting regime. It’s a huge win for Main Street, particularly as the CTA’s reporting requirements were scheduled to take effect once again beginning March 21.
Here’s the key passage from FinCEN’s release:
FinCEN announced that it will not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update beneficial ownership information (BOI) reports pursuant to the Corporate Transparency Act by the current deadlines. No fines or penalties will be issued, and no enforcement actions will be taken, until a forthcoming interim final rule becomes effective and the new relevant due dates in the interim final rule have passed. This announcement continues Treasury’s commitment to reducing regulatory burden on businesses, as well as prioritizing under the Corporate Transparency Act reporting of BOI for those entities that pose the most significant law enforcement and national security risks. [Emphasis added.]
The agency also made clear that a new proposed rule will be unveiled next month, and will likely include significant changes to the existing reporting regime:
No later than March 21, 2025, FinCEN intends to issue an interim final rule that extends BOI reporting deadlines, recognizing the need to provide new guidance and clarity as quickly as possible, while ensuring that BOI that is highly useful to important national security, intelligence, and law enforcement activities is reported.
FinCEN also intends to solicit public comment on potential revisions to existing BOI reporting requirements. FinCEN will consider those comments as part of a notice of proposed rulemaking anticipated to be issued later this year to minimize burden on small businesses while ensuring that BOI is highly useful to important national security, intelligence, and law enforcement activities, as well to determine what, if any, modifications to the deadlines referenced here should be considered.
The CTA of 2021 required businesses to register any “beneficial owner” of a company in an effort to combat money laundering. Willful violations would be punishable by civil penalties of $500 per day (adjusted for inflation, it is now $591 per day) and criminal penalties, including a $10,000 fine and/or up to two years of imprisonment.
The Act would have impacted Main Street employers, including many print service providers, with unnecessary, complex and burdensome reporting requirements. In a coalition letter to the Treasury Department, PRINTING United Alliance and the business community asked for relief from the CTA. The Alliance joined another coalition letter asking President Trump and Vice President Vance to consider providing relief from the CTA. We are thankful that the Treasury Department recognized the need to rework the reporting requirements.
In relation to the CTA, the Alliance supported the Repealing Big Brother Overreach Act (H.R. 425/S. 100) and the Protect Small Businesses from Excessive Paperwork Act (H.R. 736). Now we look forward to reviewing the proposed regulations and remain hopeful that they will be risk-based and, rather than a data grab, will follow the money.
The Government Affairs team will continue to closely monitor any developments, and we will notify members when the public comment period opens.
In this article, Stephanie Buka, Government Affairs Manager, PRINTING United Alliance, reports on the Corporate Transparency Act. More information can be found at Business Excellence-Legislation or reach out to Steph should you have additional questions specific to how these issues may affect your business: sbuka@printing.org.
To become a member of the Alliance and learn more about how our subject matter experts can assist your company with services and resources such as those mentioned in this article, please contact the Alliance membership team: 888-385-3588 / membership@printing.org.