Corporate Transparency Act and Beneficial Ownership Information

UPDATE MARCH 21, 2025: Consistent with the U.S. Department of the Treasury’s March 2, 2025 announcement, the Financial Crimes Enforcement Network (FinCEN) is issuing an interim final rule that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act.

In that interim final rule, FinCEN 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.

Thus, through this interim final rule, all entities created in the United States — including those previously known as “domestic reporting companies” — and their beneficial owners will be exempt from the requirement to report BOI to FinCEN. Foreign entities that meet the new definition of a “reporting company” and do not qualify for an exemption from the reporting requirements must report their BOI to FinCEN under new deadlines, detailed below. These foreign entities, however, 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.

Upon the publication of the interim final rule, the following deadlines apply for foreign entities that are reporting companies:

• Reporting companies registered to do business in the United States before the date of publication of the IFR must file BOI reports no later than 30 days from that date.
• Reporting companies registered to do business in the United States on or after the date of publication of the IFR have 30 calendar days to file an initial BOI report after receiving notice that their registration is effective.

FinCEN is accepting comments on this interim final rule and intends to finalize the rule this year.

UPDATE MARCH 2, 2025: The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either. The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Treasury takes 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.

UPDATE FEBRUARY 27, 2025: FinCEN has announced that it will not issue fines or take enforcement actions for missed BOI reporting deadlines until a new interim final rule takes effect. The upcoming rule, expected by March 21, 2025, will extend deadlines and provide additional guidance. Please see the full news release from FinCEN.

UPDATE FEBRUARY 19, 2025: With both injunctions now stayed, FinCEN said on February 19 that beneficial ownership information filings are no longer voluntary. For entities in existence before January 1, 2024, reports generally must be filed by March 21, 2025. 

Effective January 1, 2024, a significant number of businesses are required to comply with the Corporate Transparency Act ("CTA"). The CTA was enacted into law as part of the National Defense Act for Fiscal Year 2021. The CTA requires the disclosure of the beneficial ownership information (otherwise known as "BOI") of certain entities from people who own or control a company.  The CTA is not a part of the tax code. Instead, it is a part of the Bank Secrecy Act, a set of federal laws that require record-keeping and report filing on certain types of financial transactions. Under the CTA, BOI reports will not be filed with the IRS, but with the Financial Crimes Enforcement Network (FinCEN), another agency of the Department of Treasury.

After extensive consideration, our firm has decided to refer our clients to their attorney for assistance with preparing and filing the BOI report or any questions regarding the new BOI reporting requirement. Axley & Rode, LLP will not be preparing or filing BOI reports. If you need assistance gathering ownership information for complicated entity structures, we are happy to work with you and your attorney to provide this information. Another alternative is to do the BOI online reporting  yourself, especially for small businesses.

For more information about the CTA or to file the BOI online, visit the beneficial ownership page on the Financial Crimes Enforcement Network site.