Business and International Tax Blog

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a significant interim final rule that substantially narrows reporting obligations under the Corporate Transparency Act (CTA). Effective as of March 21, 2025, U.S. companies and U.S. persons are exempt from reporting beneficial ownership information (BOI) to FinCEN.

Background and Recent Developments:

In recent months, the CTA's reporting requirements have been subject to significant legal challenges and shifting enforcement policies. Previously, nationwide injunctions temporarily halted enforcement of CTA reporting obligations, causing uncertainty and confusion among businesses. After these injunctions were lifted, FinCEN initially reinstated compliance obligations but the U.S. Treasury Department subsequently indicated its intention to review and potentially narrow reporting requirements. This interim final rule issued on March 21, 2025 is the result of this review.

Key Changes Under the Interim Final Rule:

1. Exemption for Domestic Companies:
   • All U.S. domestic entities—corporations, limited liability companies, limited partnerships, and other entities created by filing with a U.S. state or tribe.
   • These entities no longer need to report, update, or correct any previously submitted BOI.
2. Changes for Foreign Reporting Companies:
   • Only entities formed under the laws of a foreign jurisdiction registered to conduct business in the U.S. are now subject to CTA reporting.
   • Foreign reporting companies are no longer required to provide BOI about U.S. beneficial owners. U.S. beneficial owners also have no obligation to provide information.
   • Foreign entities that were registered to do business in the U.S. before the publication of the interim rule must file their initial BOI reports by April 20.
   • Foreign entities registering after publication must file their initial BOI reports within 30 days of registration effectiveness.

Ongoing Developments:

• Public Comment Period: FinCEN is accepting comments on the interim final rule for 60 days. A final rule will be issued later this year, which may further modify current exemptions.

What This Means for Businesses:

• Reduced Reporting Burden: U.S. entities and U.S. persons no longer have immediate compliance obligations under the CTA.
• Foreign Company Obligations: Foreign entities registered to do business in the U.S. must promptly comply with adjusted reporting deadlines.
• Continued Monitoring: Businesses should continue to monitor ongoing developments related to the CTA and potential legal or legislative shifts, but as of March 21, 2025 concerns about immediate compliance are likely no longer warranted.

Conclusion:

After a year of compliance concerns and months of uncertainty due to significant legal challenges and shifting enforcement policies, FinCEN’s interim final rule provides welcome relief to U.S. businesses and entity owners previously burdened by BOI reporting obligations under the CTA.