Treasury Narrows CTA Enforcement: Domestic Entities Exempt from BOI Reporting

Note: This blog provides important information on the Corporate Transparency Act (CTA) compliance; however, a more up-to-date analysis is available. For the latest updates and insights, please refer to our most recent blog.

UPDATE: The Treasury Department has confirmed that U.S. citizens, domestic entities, and their beneficial owners are exempt from penalties and fines under the Corporate Transparency Act (CTA).

On March 2, the Treasury Department announced a significant shift in the enforcement of the Corporate Transparency Act. Many view this as a decisive conclusion regarding the reporting of Beneficial Ownership Information (BOI) for domestic entities. The administration confirmed that U.S. citizens and domestic reporting companies will not face penalties for failing to submit BOI. Instead, enforcement will focus solely on foreign entities operating in the United States. 

Treasury Confirms Exemption for U.S. Citizens and Domestic Entities

Treasury’s decision effectively means that U.S. citizens, domestic entities, and their beneficial owners are free from penalties. Even with new reporting deadlines set through FinCEN’s interim final rule, enforcement actions will remain suspended for these groups.

Focus Shifts to Foreign Entities Under the CTA

The Treasury plans to issue a proposed rule that specifically targets foreign reporting companies. This measure is intended to support American taxpayers and small businesses, which have long expressed concerns about compliance costs and the complexities associated with the CTA.

Understanding the Policy Rationale Behind Treasury’s Decision

According to Treasury, this recalibration aims to “support hard-working American taxpayers” and ensure that the CTA serves the public interest effectively. However, critics have raised concerns that this shift could create a loophole, allowing non-U.S. parties to establish entities domestically to evade stringent reporting requirements.

What’s Next? Preparing for Future CTA Compliance Changes

While the Treasury’s latest announcement provides temporary relief for domestic businesses, the statute itself has not been appealed. The proposed extended deadline to January 1, 2026, remains in effect for most business owners. Even with current enforcement paused for domestic entities, companies should maintain diligence. Understanding beneficial ownership and preparing for the potential reinstatement of requirements will remain essential.

Stay tuned for further updates as this dynamic regulatory issue evolves and contact our Global Business Services team if you have any questions.