Fines on Hold for Failure to Meet Corporate Transparency Act Deadline

The Corporate Transparency Act (CTA), the law that can't make up its mind, is having second thoughts for the third or fourth time.

The U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) has 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 by the recently established March 21 deadline.

FinCEN said in a statement: "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."

But that ruling won't be the final word. The statement continues: "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 rule-making 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."

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.

That deadline was pushed back to March 21 after a series of conflicting court rulings that questioned, then upheld, the constitutionality of the law. (“Beneficial owners” are defined as people who own 25% or more of the company, or exercise significant control over it.) 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.

The law had teeth — and may soon get them back. As the law is currently written, failure to comply with BOI reporting requirements can result in significant penalties, including fines of up to $10,000 and potential criminal liability. Those fines are on hold — for now — and it's anybody's guess whether FinCEN will reinstate them, abolish them, or make them even more stringent.

This story appears to have no ending. Stay tuned.