Corporate Transparency Act: U.S. Treasury Issues Interim Final Rule and New Deadlines

On February 18, 2025, the Financial Crimes Enforcement Network (“FinCEN”) announced it was providing an extension for filing beneficial ownership reports (“BOI reports”) under the Corporate Transparency Act (“CTA”) until March 21, 2025. At the same time, FinCEN signaled it would be revising the final regulations (the “Final Rule”) that implemented the CTA before the March 21, 2025, deadline. On March 2, 2025, FinCEN announced its suspension of enforcing the CTA against domestic reporting companies and U.S. persons. On March 21, 2025, pursuant to the Trump administration’s policy efforts to deregulate and minimize regulatory burdens for America, FinCEN issued an interim final rule (the “Interim Rule”) significantly reducing the applicability of the CTA.

Interim Rule Key Changes

1. All domestic companies are now exempt from BOI reporting. Further, FinCEN will not enforce any beneficial ownership reporting penalties or fines against U.S. individuals or domestic reporting companies or their beneficial owners.

2. Only foreign reporting companies that are formed under the law of a non-U.S. country and that have registered to do business in any U.S. State (territory or possession) or Tribal jurisdiction by the filing of a document with a Secretary of State or similar office, will be subject to the CTA. The Interim Rule makes clear that only the non-U.S. beneficial owners of a foreign reporting company shall be reported, and if all of the beneficial owners of the foreign reporting company are U.S. persons there is no requirement to disclose any BOI of the beneficial owners.

3. For foreign reporting companies that do not qualify for any of the existing exemptions under the Final Rule, they will have new reporting deadlines to file their BOI reports. 
a. Reporting companies registered to do business in the U.S. before the issuance of the Interim Rule must file BOI reports no later than 30 days from that date.
b. Reporting companies registered to do business in the U.S. on or after the issuance of the Interim Rule have 30 calendar days to file an initial BOI report after receiving notice that their registration is effective.

4. The effective date of the Interim Rule is March 21, 2025.

Comments

The CTA itself does allow for the Secretary of Treasury to exempt additional entities from the applicability of the CTA with agreement from the Attorney General and the Secretary of Homeland Security. The creativity of exempting domestic reporting companies does seemingly result in the exception swallowing the rule. It remains to be seen how the U.S. Congress will react to the Interim Rule and possibly work towards an amendment to the law that can overcome a veto by President Trump. It should be noted that there are still several active court cases addressing the constitutionality of the CTA itself. 

As stated, the Interim Rule is effective as of March 21, 2025.  However, there will be a 60-day comment period. This is because FinCEN expects to issue another final rule by the end of the year. FinCEN invites comments on matters that include data, descriptions of costs and business practices, and studies that would facilitate quantitative estimates of the economic benefits of the CTA. For example, FinCEN estimates the total aggregate labor costs for reporting companies filing initial BOI reports in the first year of the CTA to be $21.7 billion and for reporting companies filing initial BOI in future years to be $3.3 billion annually. Based on FinCEN’s comments, it is believed that many of these costs fall upon small business owners and this is the reason for exempting domestic reporting companies, as well as data from the Financial Action Task Force that suggests foreign companies registered to do business pose the most heightened risk to the United States. 

It is not clear how many foreign companies actually register to do business in any of the applicable U.S. states, territories or possessions. It is typically common for U.S. federal income tax planning reasons for legitimate operating businesses to utilize a U.S. affiliated company to engage in business within the United States. Thus, we hope to see further guidance on the application of the CTA to domestic reporting companies with non-U.S. individual owners. As of now, for example, a single-member LLC with a non-U.S. individual owner would not need to file a BOI report disclosing the non-U.S. beneficial owner.  

Our Firm will continue to monitor these developments and future developments as they are announced. We remain available to answer any of your CTA reporting questions.