In a news release of March 2, the US Treasury Department reported it would not enforce the Corporate Transparency Act (CTA) and related Beneficial Ownership Information (BOI) reporting rules.
The announcement effectively suspends penalties for American citizens and domestic businesses, channeling the department’s enforcement action to foreign enterprises.
Trump Welcomes The Decision
The Treasury’s action was welcomed by former President Donald Trump immediately, as he toasted the suspension of the BOI rule on Truth Social. He referred to the reporting requirement as “outrageous and invasive,” terming it a “disaster” for small business.
Trump praised the Treasury Department’s action, saying, “The economic menace of BOI reporting will soon be no more.” He further pointed out that the Treasury is finalizing emergency regulations to formally suspend the rule for American business.
History Of Corporate Transparency Act
The CTA, which was enacted in January 2021, was intended to provide greater financial transparency and help combat illicit activity such as money laundering and drug trafficking. Companies would be obligated to report the names of their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).
The intention was to stop criminals from utilizing shell companies for illegal purposes. Though it was scheduled to be implemented in January 2024, the CTA implementation was repeatedly postponed because of persistent legal challenges. The enforcement of the BOI reporting requirements had already been postponed several times. The legislation encountered strong resistance, especially from small businesses, that claimed it put excessive compliance obligations on them.
Treasury Secretary Scott Bessent’s Support For Decision
Treasury Secretary Scott Bessent welcomed the suspension of the BOI reporting requirements as “a victory for common sense.” Bessent welcomed the move as part of Trump’s larger agenda to minimize regulations that are obstacles to American prosperity, especially for small businesses, which he termed the “backbone of the American economy.”
The Treasury Department affirmed through social media site X that it will not impose penalties or fines on BOI reporting. The department also made clear that it would publish a new proposed rule to restrict the reporting requirement to foreign entities only.
The move to temporarily suspend CTA enforcement also comes in line with Trump’s larger economic policy of regulatory rollback and massive spending reduction. The reductions, according to Fox Business, could total anywhere from $1.5 trillion to $2 trillion and continue the former president’s deregulatory push.
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