Yet Another Article About the Corporate Transparency Act
Is this the final blow for many filing obligations?
As a short update, FinCEN posted the following alert regarding the Corporate Transparency Act (CTA) on February 27 - not on its main BOI reporting page (where the prior alerts have been posted), but instead in its newsroom:
WASHINGTON––Today, 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.
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.
So, we have now two promises from FinCEN:
A (revised) “interim final rule” that will likely update the current regulations found at 31 CFR 1010.380, to be provided no later than March 21, 2025; and
Updated regulations that will be proposed and published “later this year” for public comment, that will supposedly “minimize burden on small business” while also meeting the security purposes of the CTA.
While this may not be the wholesale death of the CTA, it is perhaps the preview of a substantially pared-down CTA. The problem is that the paring down will be by executive rulemaking - an issue subject to challenge after last year’s repeal of Chevron deference - instead of legislative action.
There are a couple of other points that are worth mentioning from this alert:
Prior alerts have mentioned that filing is still “voluntary,” as if FinCEN still expects compliance. This one does not raise voluntary filing, or the status of the BOI reporting system. Does this mean one cannot or should not voluntarily file?
On that note, while we cannot read too much into this because it is a press release and not necessarily a statement of law, the alert speaks only to a waiver of fines for any failure to file or update BOI reports. It does not speak to the correction of previously-filed BOI information. So, it is not clear whether corrected reports are still required, and/or subject to fines. This creates a conundrum, because if you were proactive and filed during the “voluntary” period but got something wrong, you perhaps still have liability to correct that information despite your best intentions.
For now, the state of the CTA reminds me of a popular video game my childhood, Mortal Kombat:
