The Corporate Transparency Act: Where Things Stand in 2025
By Anthony N Verni, Attorney at Law, CPA | Published on September 25, 2025 | © 2025
Introduction
The Corporate Transparency Act (CTA), enacted as part of the National Defense Authorization Act for Fiscal Year 2021, marked a major shift in U.S. anti-money laundering corporate transparency. By requiring beneficial ownership disclosure FinCEN reporting for certain U.S. entities, the CTA aims to combat the misuse of anonymous shell companies for illicit purposes.
As we move through the Corporate Transparency Act 2025 compliance and enforcement deadlines, since its effective date of January 1, 2024, the law has encountered significant resistance, both legally and logistically, making it one of the most closely watched regulatory changes in recent years.
1. Who Must Comply?
The CTA requires most corporations, LLCs, and similar entities created by filing with a U.S. state or tribal authority to complete CTA beneficial ownership reporting to the Financial Crimes Enforcement Network (FinCEN). A beneficial owner is any individual who either:
- Exercises substantial control over the entity, or
- Owns or controls at least 25% of the ownership interests.
Entities formed before January 1, 2024, must report by the CTA reporting deadlines 2025 (January 1, 2025). Entities formed after January 1, 2024, must report within 90 days of formation, reduced to 30 days starting January 1, 2025, under the CTA interim final rule.
2. Key Exemptions
The CTA provides 23 exemptions, covering many regulated entities, such as:
- SEC-reporting companies
- Banks, credit unions, and insurance companies
- Tax-exempt nonprofits
Large operating companies (i.e., over 20 employees, $5 million in revenue, and a U.S. physical office)
Nonetheless, the CTA exemptions and scope are narrow, meaning many small businesses, family offices, and professional service firms must comply.
3. Enforcement and Penalties
As of mid-2025, FinCEN has not announced any major actions, but the agency has emphasized that willful failure to comply may result in:
- Civil penalties: $500 per day of non-compliance
- Criminal penalties: Up to $10,000 in fines and/or two years imprisonment
This underscores how the Corporate Transparency Act penalties 2025 can pose serious risks for businesses. FinCEN’s limited enforcement to date reflects both a cautious rollout and the ongoing legal uncertainty.
4. Litigation: National Small Business United v. Yellen
In March 2024, the U.S. District Court for the Northern District of Alabama ruled in National Small Business United v. Yellen that the CTA is unconstitutional. The court held that Congress lacked the constitutional authority to require private companies to report ownership information to the federal government.
However, the ruling only applies to the plaintiffs, who are members of the National Small Business Association (NSBA). The Department of Justice has appealed the decision to the Eleventh Circuit, which heard oral argument in July 2025. A decision is expected later this year or in early 2026.
Meanwhile, FinCEN continues to require FinCEN CTA compliance for all other entities, unless and until the Eleventh Circuit upholds a broader invalidation of the statute.
5. Practical Implications for 2025
Despite the ongoing litigation, the January 1, 2025, deadline for existing entities remains in effect. Businesses should:
- Determine whether they qualify as a reporting company
- Evaluate whether they qualify for an exemption
- Identify their beneficial owners
- Begin compiling required information (name, birthdate, address, and a government-issued ID)
FinCEN has launched its BOI E-Filing System (https://boiefiling.fincen.gov/) for secure submissions and has released guidance, FAQs, and small entity compliance guides to help businesses navigate anti-money laundering corporate transparency requirements.
6. The Road Ahead
If the Eleventh Circuit upholds the district court’s decision, the CTA could face significant obstacles, potentially setting up a Supreme Court challenge. A nationwide injunction could follow, halting enforcement altogether.
Alternatively, if the court reverses the ruling, enforcement will likely accelerate, and scrutiny will increase on non-compliant entities.
Conclusion
The Corporate Transparency Act represents a seismic shift in the legal obligations of small businesses and closely held entities in the United States. While legal challenges have cast a cloud over its future, prudence suggests complying—especially as deadlines approach and enforcement mechanisms solidify.
With the legal landscape still unfolding, businesses should monitor developments closely and consult legal or compliance professionals to ensure timely and accurate filings and stay on top of U.S. corporate ownership disclosure obligations.
Need help with Corporate Transparency Act compliance?
Contact Verni Tax Law. and get expert guidance to avoid costly penalties.
