By Ryan W. Collier
Over the past year, the Corporate Transparency Act (CTA) has been a source of concern and confusion for many small business owners. At Collier Law, we strive to keep our clients informed about the latest developments and their implications for your business. For expertise in Corporate Transparency, contact Collier Law, your Local Estate Planning Firm in Salem OR, today!
Background: What Is the Corporate Transparency Act?
The CTA was enacted in January 2021 as part of the Anti-Money Laundering Act of 2020. Its primary goal was to combat money laundering, tax fraud, terrorist financing, and other illicit activities by requiring companies to report detailed information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. The law went into effect on January 1, 2024, with reporting deadlines initially set for January 1, 2025, for existing companies and 30 days after the formation of new companies.
For small businesses, this meant collecting and submitting personal information—including names, addresses, and identification numbers—of anyone who owned or controlled at least 25% of the company or had significant control over it. While the intention was to increase transparency and prevent the misuse of shell companies, the compliance burden on small businesses was significant.
Recent Developments: Enforcement Paused
In a significant shift, FinCEN announced on February 27, 2025, that it would halt all enforcement of the CTA for U.S.-formed companies and U.S. citizens. This decision was formalized with the publication of an interim final rule on March 26, 2025, which exempts domestic entities from the requirement to report beneficial ownership information. Now, only foreign companies registered to do business in the U.S. are considered “reporting companies” under the CTA unless a specific exemption applies.
Key Points for Small Businesses:
- No Immediate Reporting Requirement: If your business was formed in the United States, you are no longer required to file beneficial ownership reports with FinCEN at this time.
- No Penalties or Fines: FinCEN will not issue penalties or take enforcement actions against domestic companies for failing to file or update BOI reports under the CTA’s previous deadlines.
- Potential for Future Changes: The interim rule is subject to a 60-day public comment period, and further revisions may be made based on the feedback received. FinCEN has indicated it may propose additional rules later this year to reduce the burden on small businesses further.
Why the Change?
The suspension reflects a broader effort by the current administration to reduce unnecessary regulatory burdens, especially on small businesses. The compliance cost for the first year was estimated at $21.7 billion, with small businesses bearing a disproportionate share. The new approach aims to ensure that any information collected is beneficial for national security and law enforcement without imposing undue hardship on legitimate businesses.
What Should You Do Now?
- Maintain Accurate Records: Although reporting is suspended, it remains a good practice to keep up-to-date records of your company’s ownership and control structure.
- Stay Informed: The regulatory landscape is evolving. We recommend monitoring updates from FinCEN and contacting Collier Law with any questions.
- Consult with Us: If you have concerns about compliance or how these changes affect your business, our team is here to help.
At Collier Law, we are dedicated to assisting small businesses in navigating complex legal requirements. We will continue to monitor developments and provide timely updates as new information becomes available.