The Treasury Department announced it would no longer enforce the Corporate Transparency Act, nor enforce any penalties or fines associated with beneficial ownership reporting under the existing regulatory deadlines.

The Treasury also said Sunday it would not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after forthcoming rule changes take effect either. The Treasury plans to issue a proposed rulemaking that would narrow the scope of the rule to foreign reporting companies only. The Treasury said it’s 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.”

“This is a victory for common sense,” said Treasury Scott Bessent in a statement Sunday.  “Today’s 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.”

The CTA was signed into law as part of the National Defense Authorization Act of 2021 and requires individuals with an ownership interest in a limited liability company to disclose personal data to the Treasury Department’s Financial Crimes Enforcement Network as a way to deter illicit activity such as money laundering, tax fraud, drug trafficking and terrorism financing by anonymous shell companies. Failure to comply could result in up to two years of jail time and a $10,000 fine per violation. 

The law has been the subject of a series of lawsuits that have gone back and forth in recent months, leaving businesses unsure of whether they needed to comply. The law was support to take effect for new businesses on Jan. 1, 2024 and for existing businesses on Jan. 1, 2025, but that deadline has been pushed back as a result of the court appeals. Last month, a federal appeals court in Texas lifted an injunction in one case after the Supreme Court granted a stay in an injunction in a different Texas case in January. After last month’s decision, FinCEN extended the reporting deadline by 30 days until March 21, 2025 for most companies and announced its intention to revise the reporting rule. 

Last week, FinCEN confirmed that it would “not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update beneficial ownership information (BOI) reports pursuant to the [CTA] by the current deadlines,” essentially pausing CTA compliance for all covered entities indefinitely.

“FinCEN finally did the right thing and hit the reset button on CTA compliance,” said Joseph Lynyak, a banking partner at the law firm Dorsey & Whitney, in a statement Friday. “Besides the current overhang of litigation challenging the CTA regulations, FinCEN’s responses to injunctions issued by courts arising from that litigation compounded confusion regarding compliance. For example, indicating that reporting entities had approximately 30 days to complete initial filings was both naive and impractical. Further, although FinCEN has repeatedly indicated that completing beneficial ownership reports was a simple matter, legal practitioners have filed numerous requests for interpretative guidance that generally has been ignored.”

The move by the Treasury Department to no longer enforce the Corporate Transparency Act was criticized by corporate transparency advocates.

“With one tweet, the Administration has contradicted 15 years of bipartisan work by Congress to end the scourge of anonymous shell companies — which are a favorite tool of our nation’s global adversaries and criminals including fentanyl traffickers, money launderers, and tax cheats,” said Ian Gary, executive director of the FACT Coalition, in a statement Monday. “Hollowing out the Corporate Transparency Act is an unconstitutional subversion of Congress’ intent that will not survive judicial scrutiny.”

“This decision threatens to make the United States a magnet for foreign criminals, from drug cartels to fraudsters to terrorist organizations,” said Scott Greytak, director of advocacy for Transparency International U.S., the U.S. branch of the world’s oldest and largest anticorruption organization, in a statement. “Inexplicably, it tells foreign criminals–fentanyl traffickers, illegal arms dealers, corrupt foreign officials—that they can evade the most powerful anti-money laundering law passed since the PATRIOT Act by choosing to set up their criminal operations inside the United States.”

He pointed out that the U.S.’s national security, intelligence, and law enforcement communities strongly supported the bipartisan Corporate Transparency Act because it stopped criminals from hiding behind anonymous shell companies, regardless of where those companies happened to be formed

“Now, criminals can evade this national security law by simply starting and running those front companies inside the United States,” Gretak added. “A notorious Chinese drug trafficking organization, for example, used front companies formed in Massachusetts to distribute deadly fentanyl analogues and 250 other drugs to some 37 U.S. states. Anonymous companies in the U.S. have also been used by Iran to evade sanctions and by terrorist-affiliated groups to gain access to U.S. defense contracts.”

He anticipates that criminals will exploit the loophole by relocating to the U.S.

“Narrowing the scope of the Corporate Transparency Act to exclude U.S.-based companies creates a clear loophole for criminals to exploit, and risks making the U.S. a haven for illicit financial activity,” Greytak added. “It also ensures that the United States will be found noncompliant with baseline, globally accepted anti-money laundering and counter-financing of terrorism standards. We emphatically urge the U.S. Treasury Department to reverse this decision with expediency.” 

Small businesses were seen as being subjected to unnecessary and onerous reporting requirements by the CTA, but they might be harmed by nonenforcement, according to one small business advocacy group.

“Small businesses suffer when they are forced to compete with fraudulent and criminal enterprises that exploit anonymous shell corporations to evade accountability,” said Richard Trent, Executive Director of the small business network Main Street Alliance, in a statement. “The Trump Administration’s reckless efforts to undermine the Corporate Transparency Act’s beneficial ownership reporting requirements threaten to roll back critical protections. Weakening these rules would allow bad actors to continue exploiting loopholes, harming honest small business owners and distorting the marketplace in favor of corruption. That’s why MSA stands firmly in defense of transparency and fairness—because Main Street businesses deserve better.”

Sen. Ron Wyden, D-Oregon, the top Democrat on the Senate Finance Committee, also criticized the move. “The takeaway here is that Trump is a rich financial criminal, and he’s running his administration for the benefit of other rich financial criminals,” Wyden said in a statement Monday. “In particular, this is another gift to shadowy Russian oligarchs and money launderers, who have a lot of reasons to celebrate these days thanks to Donald Trump.”

Wolters Kluwer announced new enhancements to its ftwilliam.com employee benefits solution that now enables users to directly file a Form 5330 with the IRS directly from the platform. 

Users can now take advantage of streamlined form populating that allows each Form 5330 (used to report and pay the excise tax related to employee benefits plans) to be automatically filled with basic plan or company information already contained within ftwilliam.com. The software also sports a new Form 5330 template that lets customers populate multiple forms at once, minimizing redundant data entry and manual labor. The software connects directly with the IRS’s Modernized e-File system and allows users to track their submitted filings through ftwilliam.com. 

“With this innovation, Wolters Kluwer continues to demonstrate its unparalleled understanding of the evolving needs of retirement plan service providers. Customers can rely on ftwilliam.com to help them meet their compliance obligations with confidence and efficiency,” said Rocco Impreveduto, vice president of regulatory and compliance solutions at WK Legal and Regulatory U.S. 

Wolters Kluwer bought ftwilliam.com in 2010, becoming part of the company’s pension and benefits group. Back then, it was conceived of primarily as a way to securely comply with 5500 filing requirements. 

The news comes very shortly after Wolters Kluwer announced the planned retirement of its longtime CEO, Nancy McKinstry, who has led the company since 2003. Her official retirement date is February 2026, at which point it is intended that Stacey Caywood, current CEO of Wolters Kluwer Health, will take over as chief executive. The Supervisory Board plans to nominate Caywood as a member of the executive board during its May 15, 2025, shareholder meeting. After that, the executive board of Wolters Kluwer N.V. will consist of McKinstry, CFO Kevin Entricken and Caywood. The plan is that Caywood will then be appointed CEO of Wolters Kluwer once McKinstry officially retires.

Enjoy complimentary access to top ideas and insights — selected by our editors.

A client told me that his business was worth $10 million and he wanted to know how much he would net if he sold it and how it could be invested to provide him with sufficient cash flow in his retirement.

I disagreed and gave him a “ballpark” number off the top of my head and got an angry retort telling me I did not know what I was talking about. Then the problems came.

My client started the business in his garage 27 years ago and now employs 35 people with annual sales of $10 million. He told me that his business is worth the amount of sales he has: “Don’t you know anything about how businesses are valued? Besides, it is growing and in a few years the business will be worth $12 million so it is a bargain at that price.”

There are many ways to value a business and many factors that go into determining the value. My job suddenly became trying to explain this to my client, and to do it in a way that did not upset him more than he already was, without lessening my credibility.

I tried to explain there are many different ways of valuing a private business but to simplify the discussion I would explain two basic ways. I told him that after we go over these, we can get further into values and then apply what we know to his specific company.

The first basic way is based on the earnings with a rate of return applied to the earnings to determine the value. An example is a business with earnings of $300,000 where the investor would want a 20% return. This would value the business at $1.5 million calculated like this: $300,000 ÷ 20%. If the investor wanted a 10% return, the business would be worth $3 million, and if he wanted a 25% return, it would be worth $1.2 million. Explaining this was not easy. Regardless of his or any owner’s attachment, the business is a business whose purpose is to provide an income either to an investor or someone who wants to work in the business and earn their living from it. An investor would want a greater investment return than someone who wants to create a job for themself. However, in either situation the basis for the value is its earnings. In most situations the value is not based on what it would cost to recreate the business, although that is usually the situation when someone starts a business from scratch.

I told the client to set this aside and to let me tell him the other way. And then we’ll get back to what we were talking about. 

The other method is when the buyer has their own motive for wanting to own the company, i.e., what it could do for their present business. That is called a strategic or synergistic buyer. An example is when Amazon.com acquired Pillpack for $1 billion. This instantly gave Amazon.com the ability to ship prescriptions to all 50 states. That $1 billion value was only the value to Amazon.com and likely not to anyone else since Pillpack’s sales were about $100 million with far less profits. Further Amazon.com’s market value increased $20 billion when the announcement was made. No one could consider what Amazon.com paid as a true measure of Pillpack’s value to anyone other than that single buyer. 

Getting back to my client, we discussed whether there might be any strategic value to a potential buyer and whether he could identify a potential situation that would make his company attractive to such a buyer. I also identified some of his business’s value drivers so he could see what might be done to increase its value. I told him to think about our conversation and we would discuss it at a later time.

I then explained that since income was a major factor, we needed to examine what that means. I explained the process of normalizing the earnings to what they would be if someone else owned and ran the business. One example I gave him was that if he had his brother-in-law working for him at a 50% higher salary than that position warranted, we would add that 50% amount back to the profits and get a higher earnings amount that we would work off of. We would do that with every expense item. 

I then suggested a starting capitalization rate, and we came up with a ballpark value for a future starting point for any discussions about the value. To further add salt to his wound, I then told him to expect to net about 60% of any selling price after paying selling costs and taxes. With these types of discussions, I find it much better to get all the negative things out of the way early on so the client knows what to expect.

At that point I was not sure he believed what I said, but it dampened his dream of untold wealth and cooled his thinking of an early retirement. He also became somewhat assured that I understood these situations. 

A takeaway for my colleagues is this is a typical situation and eventually occurs with most of our business clients. A better way of dealing with this is to work this type of discussion into a few regular meetings with your clients to 1) provide a feel or range of what the business might be worth, 2) what the net from a sale would be and the potential cash flow from those proceeds, 3) to identify value drivers, 4) to discuss the possibility of a strategic buyer, and 5) to have your client start thinking about operating the business in a way that could increase its value rather than only increase its earnings.

I co-authored a pretty thorough article on providing a client with a method of valuing their business. If you want a copy of it, email me at [email protected] and just put Valuation Article as the subject. No messages are necessary.

Do not hesitate to contact me at [email protected] with your practice management questions or about engagements you might not be able to perform.