The Corporate Transparency Act

The Corporate Transparency Act (CTA) is a federal law aimed at preventing financial crimes by making companies disclose who really owns or controls them. It was passed in 2021 and took effect on January 1, 2024. The CTA’s goal is to stop criminals, corrupt officials, and other bad actors from hiding behind anonymous shell companies. In practice, the law requires many businesses to report “beneficial ownership” information to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) – essentially, they must provide identifying details about the individuals who ultimately own or manage the company. This includes personal information such as each owner’s name, date of birth, address, and a government-issued ID number. The idea is to give law enforcement a transparent record of who is behind each company, so that shell companies can’t be used to launder money or evade the law.

Under the original CTA rules, a “reporting company” was defined broadly to include most U.S. corporations, limited liability companies (LLCs), and other entities created by filing formation documents with any state, as well as foreign companies registered to do business in the United States. Large publicly traded companies and certain regulated entities (like banks) were exempt, but the law was expected to apply to millions of small and mid-sized private businesses. These companies were initially expected to file their first beneficial ownership reports by January 1, 2025 (for existing businesses formed before 2024). A newly formed company after 2024 would have been required to report its owners shortly after it was created. Non-compliance could eventually lead to penalties, as the CTA includes fines for companies that fail to file the required information. In short, as the CTA was originally written, many ordinary small businesses would have needed to submit detailed information on their owners to the federal government.

However, the rollout of the CTA has been complicated by legal challenges. Toward the end of 2024, several lawsuits were filed contesting the law’s constitutionality and scope. Different federal courts issued conflicting rulings. In one case, a judge temporarily blocked the law nationwide, and in another, a judge ruled that the CTA’s reporting mandate was unconstitutional – calling it an “unreasonable search” and likening it to a Big Brother intrusion into private business affairs. That judge argued the government was forcing citizens to hand over personal information “just so the government can sit on a massive database,” which he saw as a violation of privacy rights. On the other hand, a separate federal court upheld the CTA, finding that Congress acted within its authority to require this kind of disclosure. This patchwork of court decisions created confusion about the law’s status and left many businesses unsure whether they needed to comply while the litigation was unfolding.

In January 2025, the U.S. Supreme Court stepped in to address the situation. On January 23, 2025, the Supreme Court lifted a nationwide injunction that had been blocking the CTA, which meant the law’s reporting requirements could officially take effect while legal appeals continued. By the next month, February 2025, the last remaining court order that was hindering the CTA was also put on hold pending appeal. In response, FinCEN announced that the beneficial ownership reporting rule was back in force and extended the filing deadline to March 21, 2025 for most companies, recognizing that the earlier court delays had made it difficult for businesses to meet the original January deadline. At that point (in early 2025), it appeared that companies would soon need to start submitting their owner information to FinCEN, and many businesses were preparing to comply with the CTA’s requirements.

But in a surprising turn of events, the federal government then decided to pause and narrow the enforcement of the CTA. On March 2, 2025, the U.S. Department of the Treasury issued a public announcement that it would not enforce the CTA’s beneficial-owner reporting requirements against any U.S. citizens or companies.  In other words, the Treasury and FinCEN said they would not impose fines or penalties on U.S.-based businesses for failing to file ownership reports under the existing deadlines. Furthermore, Treasury officials stated that they planned to rewrite the CTA’s regulations so that the reporting mandate would apply only to foreign companies registered to do business in the United States, and not to domestically formed companies.  This policy shift was presented as a way to relieve burdens on American small businesses while still targeting illicit use of shell companies from overseas.  Essentially, the government acknowledged the concerns that the CTA might have been too broad and signaled that it would scale the rule back significantly.

Later in March 2025, FinCEN followed through with that plan. On March 21, 2025, FinCEN issued an interim final rule implementing the Treasury’s decision. This rule officially removed the reporting requirement for all companies created in the United States.  In the revised regulation, the definition of a “reporting company” was changed to include only entities formed under foreign laws (foreign companies) that are registered to do business within the U.S. All domestic business entities – those formed in any U.S. state or tribal jurisdiction – were explicitly exempted from having to file beneficial ownership reports. In practical terms, this means if your company was formed here in the United States, it no longer falls under the CTA’s reporting mandate. The remaining obligations under the law now apply only to certain foreign-organized companies. Even for those foreign companies, FinCEN relaxed some requirements: for example, a foreign company that has to file a report does not need to report information about any U.S. person who might own it, and U.S. individuals involved don’t have to submit their personal details for that foreign company’s filing. FinCEN also set new deadlines giving foreign reporting companies extra time – those already doing business here before the rule change were given until April 25, 2025 to file their first reports, and any foreign company that registers to do business in the U.S. after the rule change has 30 days from its registration to file.

So, are businesses currently required to comply with the CTA? As of late 2025, for the vast majority of U.S. businesses, the answer is no. All entities created in the United States (corporations, LLCs, etc.) and their owners are now exempt from the CTA’s beneficial ownership reporting requirement. FinCEN has made it clear that it will not enforce any penalties or fines against U.S. companies or their beneficial owners for not filing these reports under the current rules. In fact, the only companies that still need to worry about CTA filings at this point are certain foreign companies – specifically, those formed outside the U.S. but registered to do business within the U.S. – and even they face a much more limited reporting obligation (they must report their non-U.S. owners, with U.S. owners excluded) . Unless your business is organized in a foreign country, you do not have to submit beneficial ownership information to FinCEN right now under the CTA. The Treasury Department and FinCEN are expected to finalize these regulatory changes by the end of 2025, which would permanently cement the narrowed scope of the law focusing on foreign entities . In summary, the planned CTA requirements for millions of American small and mid-sized businesses have been put on hold. At present, U.S. companies do not need to file any new reports on their owners, and the Corporate Transparency Act’s enforcement has effectively been suspended for domestic businesses . This could of course be revisited if laws or policies change, but for now, business owners can breathe a sigh of relief that they are not obligated to comply with the CTA’s reporting mandate under the current rules.