The Treasury Department has set a new deadline of March 21 for millions of businesses to comply with a reporting requirement under the Corporate Transparency Act (CTA) after a court ruling allowed enforcement to proceed. The measure, designed to prevent financial crimes, mandates that businesses disclose information about individuals who own or control them.
Congress enacted the CTA in 2021 to curb illicit activities conducted through shell companies and opaque ownership structures. However, legal battles have created confusion for businesses, with shifting deadlines and temporary court injunctions delaying enforcement.
The U.S. District Court for the Eastern District of Texas lifted a nationwide injunction on February 18, clearing the way for the Financial Crimes Enforcement Network (FinCEN), a division of the Treasury, to enforce the law. With this ruling, approximately 32.6 million businesses, including corporations and limited liability companies, must submit beneficial ownership information (BOI) reports or face penalties.
Failure to comply could result in civil fines of up to $591 per day, criminal penalties of up to $10,000, and potential imprisonment for up to two years.
Despite the reinstated deadline, FinCEN left open the possibility of further extensions, stating that it will provide updates if additional time is needed for compliance. The agency also clarified that enforcement will prioritize businesses posing significant national security risks rather than targeting small businesses indiscriminately.
With less than a month remaining, businesses must ensure compliance to avoid penalties, while ongoing legal challenges may still impact enforcement.
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