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Federal Tax

House Passes Bipartisan Bill to Delay Corporate Transparency Act Deadline

Maureen Leddy  

· 5 minute read

Maureen Leddy  

· 5 minute read

With the Corporate Transparency Act’s beneficial ownership information reporting requirement temporarily paused pending litigation, the House has passed a bipartisan bill that would extend the deadline by one year for some entities.

On February 10, the House passed the Protect Small Businesses from Excessive Paperwork Act (H.R. 736) unanimously, with a 408-0 vote. Under the bill, existing entities that are “a small business concern” as defined under 15 U.S.C. 632 would have until January 1, 2026, to submit reports about their beneficial owners to Treasury’s Financial Crimes Enforcement Network (FinCEN).

Representative Zach Nunn (R-IA), who sponsored the bill, explained that nearly 23 million small businesses have not yet heard of the filing requirements, despite the stiff penalties for noncompliance. “Regulators should be focused on protecting small businesses,” said Nunn, “not fining them out of existence.”

Nunn also critiqued the reporting requirements for imposing what he said would be an estimated $8,000 in compliance fees for entities’ initial reports. He called the legislation “a step forward to roll back unnecessary regulations and simplify requirements for job creators while still adhering to the law.”

Representative Don Davis (D-NC), who co-sponsored the bill, said the delayed deadline “provides small business owners the time and clarity they need to meet new reporting requirements without incurring penalties.”

A day later, Senate Banking Committee Chair Tim Scott (R-SC) introduced a companion bill (S.505). Scott said the legislation will ensure small businesses “have the necessary time and information to comply with reporting requirements.” He also stressed the need for small businesses to be “protected and not overly burdened by unclear and unnecessarily complicated regulations.”

Scott’s press release elaborates that the one-year extension will give “Treasury more time to educate business owners on the new reporting requirements, assess Biden administration BOI decisions, and ensure small businesses are not overburdened — and potentially held liable — with unclear and unnecessarily complicated regulations.”

The Senate bill is co-sponsored by several Banking Committee members but has no Democrat co-sponsors as of February 13.

American Institute of CPAs’ Melanie Lauridsen welcomed the legislation. “These bills support the AICPA’s long standing position for a significant delay to help small businesses,” she said.

Lauridsen cautioned, however, that the Texas federal district court’s injunction in Smith v. Treasury barring enforcement of the reporting requirements “can be lifted at any moment.” (Smith, 135 AFTR 2d 2025-370, DC TX, 1/7/2025)

The Trump administration filed a notice of appeal in Smith on February 5, requesting a pause in the injunction while the appeal is pending. The district court has asked the plaintiffs in Smith for a response by February 14.

If Congress does not act quickly enough, the requirements could go into effect depending on the outcome of Smith and the several other pending cases that challenge the reporting requirements. FinCEN has, however, said it will provide a 30-day extension if and when the injunction in Smith is stayed.

One more caveat — Lauridsen explained that the bills extend the reporting deadline only for entities that existed prior to January 1, 2024. Entities formed after that date “would have BOI reporting due as originally outlined by the Corporate Transparency Act.”

 

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