03/03/2025
Treasury to Limit CTA to Foreign Entities – No BOI Penalties for U.S. or Puerto Rico Companies
Dear clients and friends,
I wanted to share an important update regarding the Corporate Transparency Act (CTA) and its impact on businesses in Puerto Rico and across the United States. On March 2, 2025, the U.S. Department of the Treasury issued a press release announcing that it will not enforce any penalties or fines related to the Beneficial Ownership Information (BOI) reporting rule—neither under the existing deadlines nor after forthcoming rule changes take effect.
More importantly, the Treasury has announced plans to issue a proposed rulemaking that will limit the CTA’s applicability solely to Foreign Reporting Companies. According to the Treasury, this decision is intended to serve “the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.”
What This Means for U.S. and Puerto Rico Entities
BOI reporting penalties will not be enforced, now or in the future, for U.S. and Puerto Rico-based entities. In this policy shift following the recent ruling in Samantha Smith and Robert Means v. U.S. Department of the Treasury, No. 6:24-CV-336 (E.D. Texas 1/7/25), which granted a Department of Justice (DOJ) request for a stay of the court's nationwide injunction to enforce BOI filings, the Treasury has made clear through this press release that it will amend the CTA so that only Foreign Reporting Companies are required to report beneficial ownership information.
This means that Domestic Reporting Companies—including all entities formed in Puerto Rico—will not have any BOI filing obligations under the new rule.
Puerto Rico Entities Are Domestic Reporting Companies, Not Foreign
Under the Corporate Transparency Act, a Domestic Reporting Company includes any corporation, LLC, or similar entity formed under the laws of a U.S. state or territory. Because Puerto Rico is a U.S. territory, entities formed here are considered Domestic Reporting Companies, not Foreign Reporting Companies.
Since the new rule will limit the CTA to Foreign Reporting Companies only, we can expect that Puerto Rico businesses will no longer be subject to BOI reporting requirements at all.
In summary, the Treasury will not enforce BOI Reporting Penalties for U.S. and Domestic Companies or their beneficial owners, both under the current rules and after the proposed rulemaking takes effect. Under the forthcoming rule change, the CTA will only apply to Foreign Reporting Companies and will exempt Domestic Reporting Companies—including those in Puerto Rico—from the CTA’s reporting requirements.
We will continue monitoring these developments. If you have any questions about how this impacts your business, feel free to reach out.
