The Trump Administration announced it will no longer apply the beneficial ownership information (BOI) requirements of the Corporate Transparency Act (CTA) to domestic companies. This declaration came first via social media, marking a significant shift in policy.
Under this new directive, U.S. businesses are exempt from the BOI reporting requirements of the CTA. The Treasury Department made the initial announcement on social media, followed by an official press release and a Truth Social post from President Donald Trump, who described the requirement as "outrageous and invasive."
The bipartisan CTA was originally designed to combat illegal activities like drug trafficking and money laundering by limiting the use of anonymous shell companies. While the ownership information would have been available to law enforcement agencies, it would not have been publicly accessible.
In its March 3 website statement, the Treasury Department clarified that it will not enforce penalties or fines related to the BOI reporting rule under current regulatory deadlines established during the Biden Administration. Furthermore, it will not impose penalties against U.S. citizens, domestic reporting companies or their beneficial owners after new rule changes are implemented.
Treasury's proposed rules will limit required reporting to foreign companies only, though the precise scope remains unclear – whether this applies exclusively to foreign companies registered in the United States or extends to U.S. companies with foreign ownership.
Previously, reporting requirements covered all businesses formed in the United States and foreign companies registered to operate in any U.S. state or tribal territory.
The Financial Crimes Enforcement Network (FinCEN), which oversees CTA enforcement, appears to have been surprised by this policy change. Days earlier, following court decisions that permitted BOI reporting requirements to proceed, FinCEN had announced plans to extend reporting deadlines to March 21. As of the most recent update, FinCEN's website has not reflected the Treasury's announcement, and requests for comment went unanswered.
What Happens Now?
This unexpected announcement has created uncertainty for businesses, particularly regarding already-submitted data.
The law required detailed information from "beneficial owners," including names, birthdates, addresses, and identification documents. Similar information was required from company applicants – typically individuals who helped establish the company.
Millions of companies had already complied before this announcement, raising questions about the handling of submitted information. Inquiries to FinCEN about the fate of this data have not received responses.
The status of pending legal cases also remains uncertain. Cases continue through at least four federal appellate courts, and additional litigation may emerge to compel administration compliance with the law.
Crucially, the Corporate Transparency Act itself remains valid legislation. Despite the Treasury's position, the executive branch cannot overturn the laws passed by Congress. It can, however, choose selective enforcement – similar to approaches seen with cannabis legislation. This creates potential complications, as future administrations could reinstate full enforcement.
