Treasury Halts Enforcement of Corporate Transparency Act

HVACR contractors, and virtually every other small business around the U.S., can breathe a sigh of relief as the Treasury Department announced March 2, 2025, that it will not enforce penalties or fines for beneficial ownership reporting under the Corporate Transparency Act (CTA). Treasury also stated it will not enforce any penalties on U.S. citizens, domestic reporting companies, or their beneficial owners after the upcoming rule changes take effect. 

Enacted by Congress in 2021, the CTA would have required many companies operating in the U.S. to report information about their beneficial owners to Treasury’s Financial Crimes Enforcement Network (FinCEN). Per FinCEN, a “beneficial ownership information (BOI) refers to identifying information about the individuals who directly or indirectly own or control a company.” 

In a letter to Treasury in January 2025, trade associations, including HARDI, ACCA, and PHCC, noted that by FinCEN’s own estimates, this would “cover 32 million legal entities with 20 or fewer employees or $5 million or less in revenues — in other words, nearly every small business in the United States.”  

According to Treasury, the CTA was designed to “prevent corrupt and other actors from laundering illicit funds through anonymous companies in the U.S. This effort will equip law enforcement and other partners with the information they need to disrupt financial anonymity that enables crimes such as corruption, drug trafficking, and terrorism.” 

The letter disputed that, noting that, “Despite its unprecedented scope, the CTA will be of little practical use to law enforcement, as criminals are unlikely to self-report their information to FinCEN. The brunt of its reporting burdens and excessive penalties will be shouldered by law-abiding Main Street businesses instead.” 

The law went into effect January 1, 2024, but lawsuits soon followed. On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction that suspended enforcement of the CTA. Then the Supreme Court weighed in, and implementation of the CTA was on and off again, until February 27, 2025, when FinCEN announced it would not enforce penalties or take action for missed BOI report deadlines under the CTA until a March 21, 2025, interim final rule took effect and its new deadlines had passed. 

Treasury took that a step further in its latest announcement from March 2, 2025, which stated that penalties would not now — or ever — be enforced against U.S. companies or their beneficial owners. In the interim final rule, Treasury noted that it would be “issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.” 

Treasury noted that it was taking this step “in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.” U.S. Secretary of the Treasury, Scott Bessent, noted that this was a “victory for common sense.” He added that the action is “part of President Trump’s bold agenda to unleash American prosperity by reining in burdensome regulations, in particular for small businesses that are the backbone of the American economy.”