Update on Corporate Transparency Act: FinCEN Removes Beneficial Ownership Reporting Requirements for U.S. Companies and U.S. Persons
I mentioned in an article just weeks ago (see Deadlines for Compliance with the Corporate Transparency Act in Flux) that the status of the beneficial ownership reporting requirements under the Corporate Transparency Act (CTA) remained fluid. Well, the Financial Crimes Enforcement Network (FinCEN) has now issued the interim final rule, effective March 26, 2025, which narrows the scope of the original rule as previously signaled by the Treasury Department earlier this month. Specifically, this interim final rule removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) to FinCEN under the CTA. It revises the definition of “reporting company” in its implementing regulations to mean only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction by the filing of a document with a secretary of state or similar office (formerly known as “foreign reporting companies”). FinCEN also exempts entities previously known as “domestic reporting companies” from BOI reporting requirements.
Existing foreign companies that meet the new definition of “reporting company” and do not qualify for an exemption must report their beneficial ownership information by the updated April 25, 2025, deadline. A nonexempt foreign company that registers to do business in the U.S. after March 26, 2025, is required to file a BOI report within 30 calendar days of notice that its registration is effective. Notably, these foreign entities will not be required to report any U.S. persons as beneficial owners, and U.S. persons will not be required to report BOI with respect to any such entity for which they are a beneficial owner.
This is an interim final rule subject to a public comment period until May 27, 2025, so there is some potential for adjustments after the comments are assessed. FinCEN intends to issue a final rule this year. So, while the BOI reporting rule previously applied to a vast majority of small businesses, with this new interim final rule, the requirement to file a BOI report now only applies to foreign reporting companies. Despite the interim final rule, there are still several pending legal challenges to the CTA that are still working their way through the courts.
This article is for general information only and is not intended as and does not constitute legal advice or solicitation of a prospective client. It should not be relied on for legal advice in any particular factual circumstance.
