CTA Off Again? The Treasury Department Indicates CTA Penalties for Failure to File Will Not Be Assessed Against Some U.S. Reporting Entities and Persons

On March 2, 2025, the Treasury Department published the following statement regarding enforcement of the Corporate Transparency Act (“CTA”): 

The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either.  https://home.treasury.gov/news/press-releases/sb0038

Accordingly, CTA fines and penalties will not be levied against U.S. citizen beneficial owners or domestic reporting companies, even though the CTA and its implementing regulations remain valid law, and domestic reporting companies continue to have a legal obligation to comply.

Forthcoming rules expected by March 21 may provide more information regarding the CTA’s application to foreign reporting companies (see previous alert). Those regulations or related releases also may clarify the scope and effect of Treasury’s policy in relation to domestic reporting companies and U.S. citizens.

Pending clearer guidance, domestic reporting companies and U.S. citizens that fail to report in reliance on Treasury’s stated policy of non-enforcement should have a defense against penalties in the practically unlikely event that FinCEN were to act inconsistently with Treasury's policy. In practice, FinCEN seems unlikely to enforce penalties without setting a new reporting deadline for covered companies.

Domestic reporting companies should consider whether interested actors other than FinCEN may request or require compliance with the CTA notwithstanding the official non-enforcement policy, including auditors or other regulators. Also, it is conceivable that Treasury’s non-enforcement policy could come under judicial review given its Congressional mandate. Otherwise, we expect this state of play will persist through the end of the Trump Administration. For these reasons, clients with potential filing obligations under the CTA and its implementing regulations should watch this space closely for further developments.

For more information or questions concerning this Alert, please contact the Caplin & Drysdale attorneys below.