Pearl Cohen U.S. Corporate and Securities Group
On March 2, 2025, the U.S. Department of the Treasury announced the full suspension of enforcement of the Corporate Transparency Act (CTA) against U.S. citizens and domestic reporting companies. Treasury confirmed that:
- It will not enforce any penalties or fines for noncompliance with Beneficial Ownership Information (BOI) reporting under the CTA.
- It will not enforce penalties against U.S. citizens or domestic reporting companies after forthcoming rule changes take effect.
- It intends to narrow the CTA’s scope through rulemaking, limiting BOI reporting only to foreign reporting companies moving forward.
Domestic vs. Foreign Reporting Companies
Under the CTA, a reporting company is categorized as follows:
- Domestic Reporting Company: A corporation, limited liability company (LLC), or other entity created by the filing of a document with a secretary of state or any similar office under the law of a State or Indian tribe.
- Foreign Reporting Company: A corporation, LLC, or other entity formed under the laws of a foreign country, and registered to do business in any State or tribal jurisdiction by the filing of a document with a secretary of state or any similar office under the law of a State or Indian tribe.
What This Means for Businesses
With this announcement, Treasury has effectively ended the CTA’s impact on U.S. citizens and domestic reporting companies. While the rulemaking process is still ongoing, Treasury has confirmed that enforcement will not resume—now or in the future—against domestic reporting companies or their beneficial owners. Once the forthcoming rule changes take effect, BOI reporting requirements will apply only to foreign reporting companies.
An open question remains about the reporting requirements for domestic reporting companies that are wholly-owned subsidiaries of foreign companies. It is unclear whether they will still be subject to BOI reporting requirements under the upcoming rule changes. Treasury’s proposed rule will hopefully clarify this issue.
For Treasury’s official announcement, see: Treasury Press Release.
For guidance on what this means for your business, please contact:
Oded Kadosh – okadosh@pearlcohen.com
Guy Milhalter – gmilhalter@pearlcohen.com
Austin Ochoa – aochoa@pearlcohen.com
