U.S. Companies Immune from Corporate Transparency Act

Yesterday we reported that the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) announced that it will not impose fines or penalties or take any other enforcement actions against corporate entities — including co-op and condo boards — that fail to submit their beneficial ownership information (BOI) by the recently established March 21 deadline under the Corporate Transparency Act (CTA).

Now the other shoe has dropped.

The Treasury Department has just announced yet another change: "(N)ot 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."

So after months of lawsuits, court rulings, appeals and bureaucratic reversals, American corporations — including New York City co-ops and condos — will not fall under the jurisdiction of the CTA. Which is not to say the law is graveyard dead.

"The Treasury Department," the statement continues, "will further be issuing a proposed rule-making that will narrow the scope of the rule to foreign reporting companies only. Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest."

As originally written, the CTA required more than 32 million businesses, including co-op and some condo board directors, to submit beneficial ownership information to the Treasury Department by Jan. 1, 2025. (“Beneficial owners” are defined as people who ultimately own 25% or more of the company, or exercise significant control over it.) The deadline was moved to March 21 after numerous court rulings and appeals. The law was intended to bring greater transparency to limited liability companies in an effort to combat money laundering, fraud, tax evasion and other crimes.

As this tortured saga draws to a close, the law firm Smith Buss & Jacobs went for a humorous note in a client advisory: "Hopefully this will be the last time we will need to report on the CTA. As Shakespeare might have put it, 'The BOI reporting requirements were a tale told by an idiot, full of sound and fury, signifying nothing.'"